real estate asset management What does an asset manager do - today and in 20 years?

Asset managers for real estate not only contribute to the design of their own real estate portfolio, but also to the entire real estate market. Real Estate Asset Management helps to move the market in new directions and introduce new trends, particularly through the development of innovative rental concepts or the purchase of properties with new types of use or in rising positions.

In this way, higher standards can also be set and established gradually, for example with regard to the sustainability of real estate or the integration of digital technologies to optimise the consumption of real estate in the long term. This often creates promising new opportunities not only for asset management, but also for investors.

At the same time, the constant investments of asset management in the market also ensure that jobs are created and maintained. Real estate asset management can also help to strengthen entire neighbourhoods and cities, make them attractive to residents and thus boost the regional economy again.

Depending on how the real estate market develops, it also presents new challenges for the real estate asset management sector, which must be responded to flexibly and yet carefully.

So what are the current challenges for asset managers? And what future prospects can be derived from this?

Not only in Germany, but also in many other parts of Europe and the world, the real estate market has been characterised by ever-recurring fluctuations in recent years. There are several reasons for this: On the one hand, inflation and the resulting rise in interest rates, political uncertainties, but on the other hand, the energy crisis in Europe and climate uncertainties linked to advancing climate change.

All these factors have meant that the real estate market is subject to constant fluctuations, which also affect investment volume: While just before the coronavirus crisis, a good 74 billion euros were invested in commercial real estate, this figure was only 23 billion euros in 20231.

In this market environment, the real estate asset manager’s task is to develop robust strategies that protect customers’ assets on the one hand, but also identify new potential on the market despite all the uncertainties. Experience is particularly helpful here: The longer an asset manager has been established in the real estate market, the better he can identify new market dynamics at an early stage and integrate them into his work.

Another challenge has been on the horizon for much longer than the current economic volatility: Digitalisation is also affecting the real estate industry and transforming it from all sides. Digital technologies are used in real estate, for example, to collect and evaluate data and thus control and optimise consumption.

Data management must also be digitised accordingly, as the amount of data collected is steadily growing and also requires new handling. And digital technologies such as AI are now also being used for market analysis and the identification of new market dynamics.

In this landscape, recognising which digital tools are worth investing in and implementing in real estate at an early stage is also one of the major tasks in real estate asset management.

When it comes to sustainability, the real estate industry has a particularly long way to go. This is because buildings and real estate still account for around 30 percent2 of the CO2 emissions emitted in Germany. Their energy consumption in particular poses a major challenge: The approximately 19 million residential properties in Germany account for a whopping 22 percent of German final energy consumption, while the 2 million non-residential buildings account for a further 12 percent.

However, in order to meet the increasing sustainability requirements, it is not only important to consider ecological aspects, but also social responsibility and good corporate governance. The combination of environmental, social and corporate sustainability is combined in the ESG criteria, which are now being taken into account in an increasing number of sustainability strategies.

As a real estate asset manager, the increasing demand for sustainability goes hand in hand with the challenge of designing the real estate portfolio to be both environmentally, socially and economically sustainable in the future.

Real estate is not just objects. They provide a home for tenants, are embedded in neighbourhoods, serve as a social or cultural meeting place and design entire neighbourhoods and cities. This means that a property always functions in an entire system of people and environments.

However, real estate is still all too often treated as a purely speculative object as it is a central living space. As a result, more and more properties and neighbourhoods are being demolished and rebuilt without taking into account the respective environment or the needs of the local people. What has grown over decades and centuries is now moving away from homogeneous urban landscapes without any cultural or social added value.

By understanding the real estate market as an ecosystem, we find a way towards a more holistic, sustainable way of doing business. This system is not only about profiting economically, but also about creating new social and cultural value. This is where a wide range of stakeholders, industries and professional fields come together to make their contribution and develop the best possible solutions that work not only for investors, but for everyone.