Property market trends: Large property networks try to swallow up smaller players / Local all-rounders without market coverage will find it more difficult in future

Against the background of global economic changes – including digitisation and e-commerce as well as social challenges such as the influx of refugees and democratic trends – the market for property companies is also set to change. “Those that are the quickest to adapt to these trends will also stay ahead on the property market,” said Umut Ertan, speaking on the occasion of the official opening of the new Realogis office in Berlin on 19th November 2015. Ertan is the founder and shareholder of Germany’s leading real estate consultancy for industrial and logistics space and business parks, and has worked in the property sector for 21 years.

In addition, existing business models are coming under pressure. “Driven by cheap capital, large networks and companies are in competition among one another and are trying to swallow up smaller networks,” said Ertan. “On the other hand, medium-sized, owner-managed consultancies with short decision paths as well as highly qualified employees and clear positioning are competing successfully with the bigger players.”

Long-established “all-rounders” in smaller domestic markets that already have a good market position are benefiting from the unbroken run on property. Otherwise, the expectation is that it will become increasingly difficult for property consultants without significant market coverage to win qualified orders in the investment sector.

“Competition is currently extremely fierce among property developers. At times, rents in new buildings undercut those in existing properties by up to 40%,” said Ertan. “The margins suffer as a result, but the fact that modern logistics properties are still in short supply in Germany also fuels additional healthy demand on the rental market.”

Realogis was founded in 2005 and today ranks as Germany’s market-leading consultancy and brokerage house for industrial and logistics space as well as business parks. The company thus helps manufacturers, retailers and logistics companies to find the right property in the right location and establish logistics processes.

“For logistics companies and the property sector, focusing as a consultant on only one asset class was unique at the time, especially since no one lives in a warehouse, but in practice regularly comes into contact with all other commercial properties such as office, retail, hotels as well as social service and care facilities,” said Umut Ertan.

“The success of our sharply defined profile in our first target market encouraged us to launch the same strategy in all other top logistics market. This worked well. A medium-sized consultancy of this size and market presence within an established commercial property asset class still has no equivalent in Germany.”

As the property sector is still a booming market, property specialists will continue to set up their own businesses. Umut Ertan therefore advises start-up companies: “For me, what was and remains paramount is to have a vision that you share passionately with everyone; to have your own ideas about who you are, what you can do and what you believe in – and to be 100% behind this. At the same time, what you do – the services or products that you market – should be attractive to you and inspire fascination within you. When setting up a business, the first few years are very tough and require a great deal of dedication and commitment. This only works if you are mentally engaged and have a very long-term perspective,” said Ertan. “And last but not least, an economic business plan never harms anyone when setting up a new company, and the liquidity requirements should not be underestimated here. Particularly in the first years – and if the markets topple – this is not possible to achieve in an Excel list.”