Hanover real estate market: crises leave their mark

22.11.2023 - Region, state capital and real estate industry present report

Vorstellung des Immobilienmarktberichtes 2023 v.L. Ulf-Birger Franz, Wirtschaftsdezernent Region Hannover, Anja Ritschel, Wirtchaftsdezernentin Landeshauptstadt Hannover, Andreas Schulen, bulwiengesa AG — Presentation of the 2023 real estate market report from left: Ulf-Birger Franz, Head of Economic Affairs, Hannover Region, Anja Ritschel, Head of Economic Affairs, City of Hannover, Andreas Schulen, bulwiengesa AG

The economic challenges for the real estate market in Germany and the Hannover Region will remain high in 2023: inflation, rising interest rates and energy costs, sometimes further supply bottlenecks, the after-effects of the coronavirus pandemic and the impact of the war in Ukraine are adding up to a "polycrisis". The regional real estate market is not unaffected by this situation either, asshownby the2023Real Estate Market Report, which the Hannover Region and the state capital of Hannover have now presented. The conclusion of the analysis: the multitude of crises is shaping the regional real estate industry and continues to significantly slow down the investment decisions of players on both the supply and demand side.

There is a noticeable reluctance to invest in officeproperties. This is evident in times of working from home and digitalization with regard to the design and location of workplaces and the reduction in space that this is likely to entail.
The residential real estatemarket is facing tougher challenges, particularly in connection with inflation, rising interest rates and sharp increases in energy costs - too few apartments are being built overall.
After difficult years, the hotel realestate market is looking back on a significant recovery in overnight stays in 2022, hotels are gradually expanding their supply capacities again and are counting on a continued recovery this year and next.
Meanwhile, the gaps in retailproperties are becoming more visible in all locations, although people have returned to the city and regional centers.
And in the area of real estatefor logistics and production, there is a lack of available space to meet the booming demand.

The debateon the sustainability ofreal estate is hovering over all submarkets and has not only gained momentum as a result of the discussions on the amendment of the Building Energy Act. Despite the many challenges, the heads of the region and the state capital of Hanover as well as the consultancy firm Bulwiengesa, which was commissioned to carry out the analysis, are optimistic, as the development also offers opportunities within the scope of the possibilities.

"The trends in the first half of 2023 indicate further and more severe upheavals and slumps on the real estate market. Particularly in view of these uncertainties, we are focusing on our strengths as a location together with the regional real estate industry. Hannover is a particularly stable real estate location that is characterized by great reliability and low price fluctuations."

Ulf-Birger Franz, Head of Economic Affairs of the Hannover Region

"Nevertheless, we should look to the future. Hanover is in a robust position, which makes me optimistic. The important thing is that everything that is built today must be sustainable and support the goal of climate neutrality by 2035. In the long term, this also makes economic sense, as the issue of rising energy prices will continue to accompany us."

Anja Ritschel, Head of Economic and Environmental Affairs of the City of Hanover

"Before coronavirus, the real estate markets were spoiled by low inflation, falling interest rates and benevolent central banks. Now a new era has begun. To be honest, it has to be said that the market conditions for construction and urban development across Germany could hardly be worse at the moment or in the future. But crises are always times when things can be moved and opportunities are opened up for flexible solutions in new construction and the transformation of existing buildings."

Andreas Schulten, Chief Representative of bulwiengesa, an analysis company specializing in real estate

Together with 31 partner companies from the real estate industry, Hannover Region compiles data, trends and market sentiment on all submarkets of the regional real estate industry every year and prepares these together with the consulting firm bulwiengesa AG. Current market data, assessments and forecasts for the office, logistics, residential, retail and hotel submarkets will also be presented at the international commercial real estate trade fair EXPOREAL in Munich from October 4 to 6, 2023.

The 2023 real estate market report is available for download atwww.immobilienmarktbericht-hannover.debereit.The website also contains overview maps of market-defining properties in all submarkets as well as information on selected current projects.