Statements by Managing Partner U. Höller in the run-up to the Expo Real real estate fair

At a journalists' dinner on 23 September 2026 in Frankfurt, Ulrich Höller, Managing Partner of ABG Real Estate Group, gave the following assessments of current developments in politics, business and real estate markets in the run-up to the Expo Real real estate trade fair (5 to 7 October 2026).

I. Market environment and location Germany

The market continues to lack growth impulses, while geopolitical risks are increasing. Geopolitical conflicts can – as can currently be seen – have a very rapid impact on monetary policy via energy prices and inflation. It is true that the real estate market has now adjusted to a higher interest rate level. For investors, however, it is not so much the ECB's individual interest rate decision that is important, but the question of how reliable the economic framework conditions are overall. Capital is generally available, but is used much more selectively under these conditions."

"Capital for investments is basically available. However, Germany must get better at developing concrete projects from it. Long planning and approval procedures as well as complex regulatory requirements delay investments and make projects more expensive. The housing turbo and the BauGB amendment are starting in the right places. However, whether this will actually result in an acceleration will be decided locally. The municipalities have been given new room for manoeuvre and must be prepared to use it and make decisions quickly."

II. Investment market and financing

"Buyers and sellers are now much closer to each other in terms of asking prices than they were a year ago. At 12.3 billion euros, the commercial transaction volume in the first half of the year was eight percent above the previous year's level, but there is still no sign of a broad recovery. Particularly at the property level, there is now much greater differentiation. Rentability, investment requirements and long-term competitiveness are increasingly determining the price investors are willing to pay for a property. Good properties find capital, but pricing remains difficult for properties with structural deficits."

"The zero interest rate phase is history and will not return. The current interest rate level has largely been priced in. In principle, this creates more calculation certainty again. However, if the risk-free interest rate in the form of yields on German government bonds continues to rise, pressure would increase in terms of profitability in real estate investments."

"Many loans that were taken out under completely different interest rate and valuation conditions will have to be refinanced in the coming years. If lower real estate values meet more conservative loans, financing gaps can open up. Since not every owner can or wants to contribute additional equity, this is likely to result in selling pressure, which in turn opens up new entry opportunities for investors with strong capital."

"Today, value creation is no longer automatically created by a rising market. It must be developed more strongly from the property itself. Transformation, repositioning, conversion and active asset management will therefore be among the central tasks of the coming years. In the case of many older properties, it will now be decided whether they can be made competitive again through investments or whether they will lose market attractiveness and value in the long term."

III. Office and living

"Home office and hybrid working have changed the office space requirements of many companies. At the same time, the demands on the space that are still needed are increasing. There is a demand for modern, well-connected and flexibly usable offices with a high quality of stay. The growing spread in the market shows that prime rents are rising in this segment, while older portfolios are coming under increasing pressure."

"A good address alone no longer guarantees successful office leasing today. If space cannot be used flexibly, is not convincing in terms of energy efficiency or requires significant investment, it will come under pressure even in established locations. Part of the vacancy rate is therefore less a demand problem than a product problem. This creates pressure for owners to think about investments, repositioning and alternative uses at an early stage."

"Current figures from bulwiengesa show how large the gap between planning and actual construction activity continues to be. The recorded residential project volume rose by 2.9 percent to around 68 million square meters in mid-2026. However, around 31 million square meters are still in the planning stage and only 15.5 million square meters are actually under construction. The volume of construction starts is also still 67 percent below the peak of 2022. There can therefore be no talk of a trend reversal in residential construction yet, but rather of a market blockade. Cancellations and extended construction times are paralyzing the completion figures.

Incidentally, high rents for new buildings are not the result of greed for profit and exaggerated demand, but of high construction costs. These must be reduced, for example by strengthening serial construction, but above all by reducing cost-driving building regulations.

IV. ABG Real Estate Group – Strategy and Development

"High-quality office projects remain an essential part of our DNA. At the same time, we are significantly expanding our commitment to the residential segment. In Munich alone, we are currently developing around 1,500 apartments. We are seeing a structural excess demand. That's why residential is a business area for us that we are already expanding now and will continue to do in the long term."

"With our planned fund for residential project developments and redevelopments in Germany, we are further expanding our investment business. The first acquisition is scheduled to take place before the end of this year. This will enable us to combine our many years of development expertise more closely with our investment and asset management. Especially in the current market, we see opportunities in projects with a clear development perspective that require capital and operational expertise to be implemented."

"Our many years of experience with complex project developments are particularly valuable in today's market. At the 'Palais Rossmarkt', construction is scheduled to start at the end of 2026 for the comprehensive revitalisation of the historic ensemble. At 'Central Parx', we celebrated the topping-out ceremony in June, and work is progressing according to plan. With the 'Yorcks Campus' in Düsseldorf, we are completing a comprehensive revitalisation. The progress made on these projects shows that challenging developments can be implemented even under current market conditions."

"We have now driven forward the expansion of our asset management announced last year with further mandates in Berlin, Frankfurt and Dresden. These include the 'Taschenbergpalais' in Dresden, the 'Garden Tower', the 'Eurotheum' and the 'Japan Center' in Frankfurt as well as the 'Pressehaus am Alexanderplatz' in Berlin. For us, this is not just about portfolio management. We contribute our experience in project development, leasing and repositioning to further develop properties operationally. Precisely because competitive portfolios and portfolios in need of investment are increasingly diverging, active asset management is becoming increasingly important."

"In 2027, our company will have been in existence for 60 years. During this time, we have experienced very different real estate cycles and profound changes in the industry. With this experience behind us, we will not wait for the return of the old market, but will take advantage of the opportunities of today. With project development, investment and asset management, we can accompany real estate throughout its entire life cycle and invest where we see a resilient value creation perspective."

V. Outlook 2026/2027

"The market was still expecting a stronger recovery in 2026. Today, we have to note that normalisation is proceeding more slowly. Price discovery has progressed, financing is also possible again and capital is available. However, geopolitical uncertainty, Germany's weak economic development and the existing reform backlog continue to stand in the way of a broader revival of the market. From today's perspective, I therefore do not expect a more significant revival until the second half of 2027."

"Even with a broader market recovery, real estate and sub-markets will develop very differently. Quality, lettability, investment requirements and long-term competitiveness will remain decisive. Good properties with resilient cash flows will continue to find capital. Revitalisations and repositioning open up additional opportunities in the portfolio, while upcoming refinancing can bring additional properties to the market. Waiting for a major upswing is the wrong strategy. It is important to precisely assess the risks and value creation potential of an investment and to address them consistently."