Andreas Ridder, Managing Director Austria & CEE, as Distinguished Guest Online at the Entrepreneurial School®.
The impact of the Corona crisis on the real estate market
Who, if not Andreas Ridder, should know about the trends in the real estate industry? As the Managing Director for the Austria & Central & Eastern Europe (CEE) market at the world-leading full-service real estate services and investment organization CBRE, he deals with the effects of the Corona crisis on the real estate market.
"The Corona crisis was like an accelerant in the real estate market," Ridder explains in the MCI Livetalk with Andreas Altmann. There are distinct winners, but also obvious losers. Apartments and logistics halls are winning, while hotels and other leisure facilities are amongst the losers.
Ridder is convinced that Tyrolean hotels will recover more quickly than Viennese city hotels. After all, the desire for vacations in nature is still unbroken. Business travel in big cities has the disadvantage that video meetings have fundamentally changed business meetings and therefore this industry will recover more slowly. Already, hotel development projects in Vienna have recently been brought to a halt and the space has been converted to residential units.
In addition to business travel, Ridder also sees the world of work facing a major upheaval. The future of offices in particular is a hot topic on the real estate market. Office demand has plummeted 40% since the Corona crisis began. CBRE conducts many surveys on this topic and Ridder is convinced that offices will still have an important raison d'être in the future - just different.
For example, Ridder predicts that everyday working life will be characterized by one to two days in home office, where desk tasks can be performed better. Instead, the office will be used as a creative zone, for meetings and exchanges with colleagues. Of course, the office surrounding will also have to change. Well-being and sustainability will clearly be in the focus.
Home office is also changing the private environment. There should be a place for a desk, separate from family life. Three-room apartments are therefore becoming increasingly popular, and purchase prices and rents for apartments will also remain constant or rise in other respects.
Ridder is convinced that especially in Tyrol apartments will only become scarcer and more expensive. The geographic location does not allow for an abundance of real estate. In addition, the environment at the place of residence becomes more and more attractive. Those who can afford it want to live in a healthy and beautiful environment. The question is more about how to protect the local population so that they can afford housing.
Ridder sees the trend toward living in megacities as only intermittent. Young people will be drawn back to cities for leisure. They are however, facing a hard time in the real estate market right now, Ridder affirms. Currently, it is almost an impossibility for them to buy property.
Ridder does not want to confirm speculations that affordable living spaces will be vacated by those who can no longer afford rent due to the currently prevailing unemployment and short-time work circumstances. He refers to the fact that Austria is a welfare state and these persons in difficult situations need to be to have a place to live.
However, housing space could be available in older buildings from the 60ies and 70ies. As sustainability is a topic that is currently being discussed a lot in the real estate market, older buildings could become vacant.
Evaluations by CBRE look at the impact of sustainability issues such as CO2 on valuations and transactions. This topic will shape the real estate market in the long term. After all, if operating costs are lower due to sustainable construction, it will be possible to charge more rent.
Headquartered in Dallas, Texas, CBRE Group is the world's largest commercial real estate services company by revenue in fiscal 2019. CBRE has approximately 100,000 employees in more than 530 offices worldwide.
Dr. Andreas Ridder is Managing Director Central & Eastern Europe at CBRE Austria GmbH. He manages and coordinates the offices in this region. Dr. Ridder has extensive real estate knowledge, especially in the investment market. He combines this experience with a particular focus on the business needs of each client.
Prior to joining CBRE, Andreas Ridder worked for Bank Austria/Kreditanstalt. He was involved in real estate investments and real estate development projects in Austria. Andreas Ridder joined CBRE in 1991 as Managing Director of the newly established office in Austria. In this function, he first established the Vienna office and later the CBRE network in Central and Eastern Europe. He has extensive real estate knowledge, particularly in the investment market. Andreas Ridder combines this experience with a special focus on the business requirements of each individual client.