As of 09/2024
Welcome to the second interview in our three-part interview series with Daniel Malek, CEO of D-A-CH at KENSINGTON Finest Properties! In this interview, Malek discusses the current trends and prospects for the property market in the D-A-CH region.
You will learn how digitalization is affecting the real estate industry, what opportunities and challenges are arising for buyers and sellers, and how issues such as rural exodus, demographics and the emergence of commuter belts are influencing the market. The insights and forecasts offer you valuable orientation in a constantly changing market environment. Stay tuned for the third and final part of our series, which will be published here shortly!
The real estate market in Germany, Austria and Switzerland has changed dramatically in recent years. It is no longer enough to put a note in the window and have prospective buyers knocking on the door saying, ‘Please, can I have this property?’ How do you see the current trends, and what do you expect for the future?
If you look back over the last four years, we have come out of a very strong phase in the real estate sector. Then came Corona, which initially paralyzed everything – a real knockout. But it has to be said that the real estate market has recovered relatively quickly. I believe that we have now slowly bottomed out. The ECB is due to make its decision in September, I believe it's even happening tomorrow. I expect interest rates to be cut by 0.25 percent. But I think this interest rate cut is already largely priced into the current interest rate level. The interest rate is currently around 3.2 to 3.3 percent.
In the medium term, if one dares to venture a forecast, one must say: the last four years have taught us that whenever we think we have weathered the worst, the next blow comes. But if we assume that there will be no more big surprises and that everything will take its normal course, then I believe that interest rates will settle at around 3 %. Prices will also stabilize. We have seen that prices bottomed out last year. There is a certain stagnation, but in the conurbations there is already a slight increase of 1-2% compared to the previous month. This indicates a positive trend.
Of course, we have to be careful here of prices rising too sharply again too quickly. That could become a problem. But overall, I believe that the market will continue to recover in the medium term. An interesting conversation I had last week was with someone who said that we will soon have a seller's market again. I don't see that. I don't think we'll get back to a situation where a sheet of A4 paper in the window attracts a hundred potential buyers.
Many buyers are interested in luxury or premium properties today. What makes a property a premium property? From KENSINGTON's point of view, is the topic of ‘Finest Properties’ much more than just a label for high-quality properties?
Of course, we are represented in the premium segment. But for me, the term ‘Finest Properties’ primarily means the bridge to service. What is particularly important to me is the best possible service – not just offering high-quality properties, but also the best, highest and finest service on the market. It's not just about the property, but also about how we present the property and the service around it.
In this respect, it makes no difference to us whether it is a flat in Bremen for €200,000 or a villa in Mallorca for €40 million. Different customer groups naturally have different requirements, which are also reflected in the respective property, but our aim of providing the best service remains the same for all of them. In this context, it is not only the price of the property that is important, but also the quality of the services that we provide in relation to the property.
When I bought my first apartment at the age of 20, it was a 16-square-metre apartment in the neighborhood that cost around 12,000 euros at the time. Today, of course, the real estate market is different. If I were to buy a property today, it would probably not be such a small apartment. But if I imagine putting my own villa up for sale with KENSINGTON Immobilien – I don't have one, but if I did, I expect that my property, whether it's worth 20,000, 50,000 or 100,000 euros, will be marketed just as well and professionally as a 40-million-euro villa.
When you look at individual regions, cities and even inner-city locations in the D-A-CH region, what do you think is particularly attractive at the moment and where should one perhaps still wait and see?
As CEO for Germany, Austria and Switzerland, my view of the attractive real estate regions is quite clear. In principle, the metropolises are always in demand. Cities like Hamburg, Berlin and Düsseldorf are among the long-running hits on the property market. In these cities, prices are already rising slightly again, which indicates that demand will remain high. However, it is not only the cities themselves that are popular, but also the neighboring areas, known as the commuter belt. This development has been further intensified by the pandemic, because many people are being drawn a little way out of the cities; they want to live in a green environment but still be close to the city.
On the other hand, I also see certain problems, especially in rural areas that are far removed from urban centers. One example would be a residual farm in Saxony, 300 kilometers from Berlin. Such regions are experiencing a demographic change that is having a negative impact on the real estate market. The older generation is gradually dying out and the younger generation is either moving to the cities or to the suburbs. This means that rural areas are increasingly being abandoned, and it is becoming more and more difficult to find buyers for properties in these areas. Nowadays, everyone wants to be able to get everywhere quickly, to be independent and not constantly dependent on a car. Many people therefore prefer to live close to urban centers.
I believe that, in certain niches, the isolated country will continue to have its raison d'être. There will always be people who appreciate living away from civilization, without neighbors nearby. But in the main, I see it as rather problematic. Because demographic change is unstoppable and the migration to the cities or their surrounding areas will continue to increase. This development will not happen overnight, but over the next 10 to 20 years I expect that the real estate market in these rural areas will increasingly change.
I also see that digitization will play an increasingly important role in the real estate industry. Everything is becoming more and more digital, and of course this also applies to the real estate industry. What has already changed in the D-A-CH region as a result of digitization and what do you think will develop in the future?
The real estate industry will definitely have to become more digitalized. Similar to the insurance industry, it is still a bit ‘dusty’, although not quite as much. As a first step, I see that digitalization must be firmly anchored in the industry. This starts with automating and integrating processes that are already partially implemented – whether it's creating exposés, marketing, graphic editing or digital signatures. Paperless contracts are also an important part of this development. All these aspects must be established as a basis.
Digitalization and artificial intelligence can therefore provide enormous support for the industry and help it to move forward, but the broker will not become extinct. On the contrary, I believe that these developments will further improve quality. At least that is our aim. People will always remain the most important factor in this business.
For me, guided tours are something you have to experience in person. No matter what technical possibilities there are, even VR glasses can never completely replace the experience. You can't smell the property, you can't feel it – these sensory impressions are simply indispensable.
For the first impression, however, such technical aids are quite helpful. Particularly if you're on holiday or the property is 300 kilometers away and you want to view it quickly, technology offers a good solution. But in the end, and for me this is the deciding factor, it's still a people business. I want to talk to a person, I want to experience the property live, see the pros and cons directly on site.
The emotions involved in a viewing are simply part of it – for me that's crucial.
