The Expo Real saw crowded aisles, clusters of people in front of some booths, and well-attended audiences at panel events. The real estate exhibition, which concluded last Friday, had a bustling atmosphere. The seven halls, hosting 1,856 exhibitors, which nearly reached last year's number, were notably busy. Nevertheless, it was observed that there was more space available, especially compared to the pre-pandemic years.

The numerous meeting points stood out — Expo Real Lounges as "neutral" spaces, and even within some booths. It aligns with the trend of increased interaction and exchange, which is also prominent in modern office spaces. Personal exchange has always been a central focus of such events. Although traditionally, Expo Real has been heavily focused on deal-making, setting it apart from events like Mipim in Cannes in the spring.

But this year was different. Most of the 40,000 real estate experts who attended came to Munich seeking direction. Sales in the German real estate markets have drastically declined. The recently released figures for the third quarter, as well as the first three quarters, indicate at best a stabilization at a low level.

Hence the question: When will the market recover? When will sales return to their usual levels? Most forecasts point to the second half or the end of 2024, and some even anticipate a sustainable recovery only in early 2025.

There currently is a lack of faith. The belief that the interest rates will remain as they are, or even decrease. For this to happen, probably one or two European Central Bank meetings without interest rate decisions would have to pass. Faith in the reduction of inflation is essential as well, contingent upon the continuation of the current downward trend. Faith in finalizing deals is also dependent on optimism about the ongoing economic progress in both Germany and Europe.

In all three areas — interest rates, inflation, and economic growth — one can come to a cautiously optimistic assessment. Some visitors of the fair pointed out transactions that are already happening but are "off-market," hidden from the public eye and not reflected in broker statistics. However, relying solely on such hidden transactions won't turn the market around.

There were a few bargain hunters in Munich, exploring the opportunity for a cost-effective market entry. However, this is likely to remain a delicate matter. The assessment of the two major property types, offices and residences, is crucial. Offices are still in demand — despite or because of remote work. They need to be easily accessible by public transportation, equipped for effective collaboration and idea development. Such spaces are scarce, highly sought after, and therefore expensive. No matter who you ask at the Expo, they express a desire to invest in these office buildings.

For residences, supply remains limited, and tenant demand is high, providing favorable conditions for investor demand. The political constraints (from rent caps to expropriations) and essential construction measures towards sustainability, which are subject to political regulations, could become problematic. There hasn't been a clearer vision on this issue in Munich. Even though the outcomes of the housing summit were received positively, they were not deemed sufficient.

Thus, attendees likely returned home from the fair with a wealth of information and impressions but without a clear picture of the future of real estate markets. This uncertainty might lead many to remain in a waiting position, hoping for signs that offer more certainty about prices and conditions. The problem: If everyone adheres to the "Please wait" sign, little to nothing happens. Those willing to take more risks might find opportunities — and could potentially be rewarded with higher returns.