The interest rate turnaround and its effects on real estate investments - a look from a financial expert's perspective

The interest rate turnaround and its effects on real estate investments - a look from a financial expert's perspective

According to a report by www.private-banking-magazin.de,
With the interest rate turnaround, the European Central Bank has drastically changed the framework conditions for real estate investments. Significantly more expensive financing conditions and the resurrection of liquid products have brought an expected end to a good decade of carelessness. The sharp decline in this year's investment volume in Germany illustrates the impact. The real estate market is experiencing a decline of over 60 percent in commercial real estate and is also recording the weakest nine-month period since 2010 in the residential investment market. In this market environment, it is becoming increasingly challenging for providers of real estate funds to generate income for their investors.

The market develops in times of interest rate changes and changing conditions. The model of outsourcing administrative tasks to service capital management companies (KVG) is becoming increasingly popular. This model offers providers of real estate funds the opportunity to concentrate more on portfolio and real estate management and to intensify the cultivation of relationships with investors. Large asset managers who maintain their own KVGs are increasingly using the services of an experienced service KVG. The trend towards KVG insourcing will probably continue in the current market environment. In view of the growing requirements from regulatory authorities and investors, many KVGen are concerned with standardizing and optimizing in-house processes. Outsourcing administrative tasks to external service providers offers the opportunity to use economies of scale and optimize costs. The interaction of different core competencies is a decisive factor. Ultimately, KVG insourcing offers the opportunity to assert oneself in a changing market environment and to secure long-term competitiveness.