Drees & Sommer Expo Vision 2009 - Expert panel meets for third time in Stuttgart

On October 15, 2009 Expo Vision 2009 discussed the current status of the real estate industry and ways to promote project developments in the Stuttgart region. The potential is there, the participants agreed, but the task now is to find ways to bring together capital, land, and good project ideas.

This is the third time that Drees & Sommer has organized Expo Vision, an event that promotes interdisciplinary discussion of the central themes of Expo Real and their influence on the region. This year, the panel comprised Marcus Weller of E. Breuninger GmbH & Co, Markus Sorg of the Baden-Württemberg Ministry of Finance, Siegfried Eschen of Eurohypo AG, Harald Alber of Deutsche Genossenschafts-Hypothekenbank AG, Volker Hahn of POLIS Immobilien AG, Ralf Laßau of Flughafen Stuttgart GmbH (Stuttgart Airport), and Thomas Jaißle of Drees & Sommer Stuttgart. The event was facilitated by real estate journalist Frank Peter Unterreiner.

The market is normalizing
The prevailing attitude in the real estate industry is one of healthy realism - that was the basic view of the expert panel. This was also evident from discussions at Expo Real, which though fewer in number than in previous years, had greater substance. "People are focusing on project developments that are clearly well conceived," explained Ralf Laßau. Breuninger, for example, is continuing its expansionist strategy in the retail sector, "In the full knowledge that this will be more difficult in 2010," said Marcus Weller. Volker Hahn reckons that the situation is now sufficiently healthy for sound investments to be possible again. "The crisis showed that the limit is reached at factor 14.5. In this year, attractive properties were often purchased by private individuals," said the expert for established properties. Thomas Jaißle's key point was that there is a shift in the customer groups and sees the current situation like this: "Drees & Sommer is also continuing its expansion. We are seeing a change in our client structure, that is, we are receiving an increasing number of orders from the public sector. Overall, minimization of operating costs and other types of savings are hot topics."

High equity ratio simplifies finance
What has to be done to ensure that the Stuttgart region emerges from the crisis stronger than before? The financing banks declared that there was no credit squeeze for realistic projects. However, to ensure collateral, banks require an equity ratio of at least 20 percent. This means finding more capital providers - particularly for small- and medium-size business projects. Siegfried Eschen supports this view and assumes that financing of investment in established properties would be easier if the securitization markets were revived. This, however, would require the product structure to be fairer and more transparent to investors. Mr Weller also sees equity ratio as the key issue. Banks - with their conventional role as finance intermediary - bear responsibility here. Greater transfer of private capital to projects should be organized with reasonable conditions. "Major projects, in particular - those with costs that run into hundreds of millions and which are essential for sound future urban development - currently receive too little support from banks."

Promoting recovery
For Stuttgart Airport, Ralf Laßau emphasized that - in addition to aircraft operations - other activities would have to be developed in order to continue operating profitably. "If the political environment allows, we are anything but averse to investing here," he states. Reporting on behalf of the public sector, Markus Sorg of the Finance Ministry stressed that the state of Baden-Württemberg is already committed to the Willy-Brandt-Straße and Karlsplatz con¬struc¬tion projects. "There are numerous reasons for us, one of which is that this is the right time to invest in the economy," said the department head. He also explained that the state of Baden-Württemberg had provided extensive financial support to help lead the region out of the crisis.

Showing what the region can achieve
Ralf Laßau highlighted marketing of the region. "Baden-Württemberg - and in particular Stuttgart - are attractive locations. The state should have the courage to advertise what it has to the world." This was essential for a successful business location on the world market.

The bottom line: Networking is essential
Further growth of the region requires confidence. This has been shaken by the crisis - and has to be restored. On this the panelists agreed. Thomas Jaißle sees partnership between all parties as the way to go. "Basically, the region has everything needed to boost the economy: capital, land, good project ideas, and the courage to adopt new technologies," he maintains. "The task now is to build or expand networks and to drive new developments in collaboration."

Download this press release.
Word