Renewable energies and real estate: stability despite market changes!

Renewable energies and real estate: stability despite market changes!

In recent years, the renewable energy market has experienced high prices and a shortage of supply. However, this trend seems to be slowly coming to an end. Cash Online reports that electricity prices are normalizing and purchase prices for systems are falling. This is supported by an increase in wind supply, driven by high approval numbers. Analysts expect renewable energy to be largely decoupled from other capital markets and geopolitical factors, leading to a calmer market.

In the context of private equity markets, a mixed picture emerges. After a record year in 2021, the sector experienced a decline in activity in 2022 and 2023. Nevertheless, markets are seeing a positive turn in 2024 with a 30-35% increase in activity. The average fundraising duration has increased from 14 to 18 months. At the same time, returns and distributions remain stable, with 17 payments recorded last year and 7 already announced for 2025.

Stability in the real estate market

Real estate transactions are showing positive development. In the first quarter of 2025, the transaction volume increased significantly, with the increase in Berlin even being 11% compared to the fourth quarter of 2024 and 105% compared to the previous year. In contrast, there were no office transactions in Düsseldorf during the same period. The trend towards smaller asset deals and value-add transactions continues to be observed, with the stability of prime returns seen as positive for future investments.

Renewable energies are seeing prices for systems fall from over 800 euros per kilowatt peak to around 600 euros. Production costs are between 450 and 500 euros, and further price declines seem unlikely. In the private equity sector, too, the valuation of business models varies greatly, with the stability of price developments being viewed as more important than the search for bottom formation.

Institutional investors and trends

The current investor survey from 2023 showed that institutional investors in Germany, driven by a certain level of reluctance, are not seeking to significantly expand their real estate quotas. How Institutional investments reports, the trend towards infrastructure and renewable energies remains strong, while similar reluctance can be observed in private debt.

The development of interest rates also influences investment behavior, with institutional investors waiting to access their commitments made in previous years before making new allocations. The stability of returns plays a central role, especially in order to meet obligations in classic investments such as government bonds. Investors are increasingly looking for real estate investment opportunities outside of Germany.

While the issue of sustainability has become less important due to inflation and geopolitical events, it remains an important facet in winning new mandates. The focus on risk management has increased, with more emphasis placed on transparent communication and customer care. Given these trends, costs have become less important than in the past, with the quality of processes and risk management being crucial when selecting asset managers.

Overall, it is a complex market in which the stability of returns and adaptation to new market conditions play a central role.