Our Spring Forecasts - Second Attempt at Recovery?

Our Spring Forecasts - Second Attempt at Recovery?

27.05.2021 Author/s: Sigrid Rautenberg

In a webinar, we presented our spring forecasts to around 550 clients and partners. Four of our experts for residential, office, retail and logistics as well as our chief economist gave an outlook and look at the biggest challenges for their segment. Read the summary here.

Economic forecast

The bulwiengesa economic forecast up to 2025 was presented first. In addition to the economic data, however, the coming years will be shaped on the one hand by a landmark ruling of the Federal Constitutional Court: At the end of April, Karlsruhe linked its ruling, which obliges the government to enact stricter climate laws from 2030 onwards, to "liberties of future generations" even beyond 2030. The Constitutional Court also called for long-term thinking and action by all political actors - even after the (own) legislative period. This also applies to the issues of national debt, pensions, health and care. On the other hand, no forecast can be thought of without looking at the demographic development. Both have an impact on the real estate markets.


The "demographic trap" shows the red box - stagnation can be read there. Already in 2020, the number of people in employment has declined by -1.1 % compared to the previous year. The blue boxes show why: Above all, self-employed and marginally employed are responsible for the decline and the main sufferers of the pandemic, while companies are struggling to retain their core workforce.

Also indispensable is a look at inflation. This has already been low in 2019 and 2020 (yellow box), but the picture seems to be changing. There are differing opinions here: The bulwiengesa economists are relatively conservative with 2.2% for 2021, because the ECB's interest rate hike is already included; the German Council of Economic Experts speaks of 2.4%. In the second half of 2021, one will have to be prepared for higher growth rates in consumer prices, also due to the VAT increase compared to the previous year. Inflation and interest rate worries are also causing movement on the bond markets.

In order to achieve the climate targets that have been set, the real estate industry must also become active. Climate neutrality of buildings must be achieved by 2045. New regulations will be issued, building laws will change and there may be subsidies for renovations. It is clear that climate protection will lead to enormous efforts in the building sector - there will be more regulations, but it will also show the industry opportunities through renovations.

The problem with official statistics is their lack of transparency: they publish the explicit national debt, but not the implicit debt, i.e. the promised benefits for the future, such as pensions. If these promises of benefits are added, the total national debt amounts to 13.8 trillion euros - which must be borne by the next generation. There is a long-term need for consolidation: arithmetically, an increase in revenues by 18.5% or a reduction in expenditure by 14.5%. Both interfere massively with economic life.

The "demographic trap", i.e. the decline of the population in Germany, seems unstoppable. However, this also opens up investment potential for the real estate sector, for example in the area of health care and social real estate. The baby boomer generation is creating great demand. For example, there will need to be around 47,000 nursing homes by 2060, up from 15,000 in 2017. Improvements are also needed in the accessibility of buildings. So far, only about 5-7% of the residential building stock is barrier-free. There is enormous potential here.

Contact person: Martin Steininger, steininger [at] bulwiengesa.de


Last year, the residential asset class was extremely strong. And the boom will continue in 2021 - even without significant demand from abroad for certain residential products. Now we are at the crossroads of a development in the residential sector, because the influencing factors are changing slightly.

Headwinds will come in the next few years from interest rate developments. Alternative investments will again earn more attractive interest rates, and the housing investment market may also suffer. One positive piece of news for the industry in spring was the halt to the Berlin rent cap; however, the elections in autumn in Berlin and at the federal level will put regulatory issues back on the agenda.

New aspects that will accompany us in every new building in the next few years and to which we must find answers are the topics of ESG and the CO2 reduction targets. Things are already happening here: ESG-compliant uses are now being planned in every second new building development.


The retail segment shows an ambivalent picture during the Corona crisis. This is evidenced by a look at the turnover development alone. While food retail had the highest rate of increase in the stationary network over the course of the last eleven years, fashion retail experienced an unprecedented slump.

A key question in high-street retail is: Will it be a long way back? And if so, what does that back look like? What will happen to our city centres? Opinions differ here, but it is clear that it will take a long time to stabilise the city centre again. The rent forecasts are correspondingly uncertain; the exact level of high-street rents is hardly quantifiable. Many chain stores are thinking about streamlining their branch network, withdrawing or downsizing. On the other hand, pure internet players are considering moving into the city centre to support their internet business through emotionality. The topic of mixed use is becoming more and more important - politicians are also launching programmes to strengthen centres or are renting empty shops, for example. There is a consensus among all actors to strengthen the city centre.

The local retail trade seems to be the stabiliser of the stationary retail trade - but it already had this role before Corona. From 2013 to 2020, we see a 50% increase in multiples in the chart, so that in 2020, the median (=blue horizontal line) paid almost 20 times as much. This is because the demand for care close to home increased, especially during the pandemic. But discounters and full-range retailers have also entered the local supply market much more strongly in recent years, through densification or new construction projects in residential areas. What the pandemic has also shown: Online retail is also gaining importance in the area of local supply.

The third challenge shown here is digitalisation. Many new technologies will be introduced, which will also go far beyond the new (contactless) forms of payment. However, this will lead to significant cost increases because the stationary retail trade is investing in digitalisation. Retailers will try to make savings from space costs as well. Therefore, the mood among investors is rather subdued in the area of rent development.

Contact person: Dr. Joseph Frechen, frechen [at] bulwiengesa.de


There is no doubt that Corona had a major impact on the logistics industry - both positive and negative. Supply bottlenecks were a challenge. Due to decreased demand for logistics services - untypical for the development of the last few years - logistics turnover slumped. The long-term trend remained constant, not least due to increased e-commerce, which will be the defining theme in the logistics segment.



Among commercial real estate, offices are still the most traded asset class. Much of the initial uncertainty was and is related to the home office discussion. In the meantime, the discussion has become more objective and market players are once again focusing on the most important influencing factors: economic development and office employment trends.


There is a clear correlation between take-up and GDP - crises like the one last year have a direct impact on take-up because lettings are postponed. At the same time, the bulwiengesa forecast assumes that prime rents will continue to rise moderately or stagnate until 2025, both in A and B markets; we do not anticipate a space crisis.

This is also reflected in the vacancy rate, which is currently 3.6% across all A cities and will move towards a level of 4% in the next few years. This is because, on the one hand, we assume a positive development in office employment because redundancies hardly have an impact on office employees. On the other hand, we see that from 2023/24 office project developments will decline sharply; currently some projects are on hold, also because there are financing difficulties with speculative project developments.

Note: The webinar took place on 19 May 2021. If you would like to be informed about our events and other bulwiengesa projects in the future, we recommend subscribing to our newsletter.

More about the forecasts? Those who are already RIWIS customers will soon find the detailed forecasts on the platform. You can register for a RIWIS test account.

Contact person: Sigrid Rautenberg, Head of Communications at bulwiengesa, rautenberg [at] bulwiengesa.de