Wood intentions

The organisers of Expo Real, Europe’s largest property fair, could not have chosen a more interesting time for their annual event, which was held in Munich in October. Three factors had set the stage for a particularly noteworthy and potentially difficult show.

The first, of course, was the coronavirus pandemic, which led to the cancellation of all large fairs in the Bavarian capital for 18 months, including the 2020 edition of Expo Real. It also led to hotels remaining empty and work being postponed on construction sites, resulting in a difficult period for several sectors of the property market. 

But there were other local issues too. In September, iaa Mobility, the first major expo to be held in Munich since the enforced hiatus period, had been met by unprecedented protest as environmentalists criticised the lack of alternative transport solutions on display. Then, two weeks before Expo Real, Berliners backed a referendum that requested their government draft a law to force 12 large private property companies to sell their 240,000 or so flats to the city for less than the market rate. The vote, which passed with a margin of more than 17 percentage points, demonstrated how the need for affordable housing has turned previously unthinkable measures, such as expropriation, into mainstream ideas.

Against the backdrop of this triple whammy, observers arrived at Expo Real with unusually existential questions on their minds. What sort of state was the property industry really in and how would it choose to present itself? Where is the sector heading? And how were key players meeting the challenges? 

Those searching for answers to the wider health of the industry were given a succinct answer from one of the fair’s keynote speakers, Gertrud Traud, chief

economist at Helaba, one of Germany’s five state-owned regional banks. Summarising her message as, “Housing strong; commercial weak,” she showed how the value for owner-occupied houses in Germany has continued to rise at pre-crisis rates, while the price of offices flattened in 2020. Retail fared worse, with prices below 2018 levels. The picture is similar in most Western markets. One concern across sectors is the rising cost of construction, driven by such diverse factors as labour shortages, high prices for lumber and steel, and post-pandemic investment programmes leading to increased demand. 

Manouchehr Shamsrizi is well positioned to assess emerging trends in the industry. A researcher at Humboldt University in Berlin who focuses on the interplay between technology and sociology, he takes people on tours to innovative exhibitors at trade shows in Munich. “At this year’s Expo, two things stood out; one was about the external perception and the other about the internal focus,” he says. “Real estate is responsible for 40 per cent of global greenhouse emissions and loss of biodiversity but the public controversy about sustainability during iaa Mobility was much louder than during Expo Real. Interestingly, for green pressure groups, property still seems to almost fly under the radar even though it is so important.” But that didn’t mean that exhibitors ignored the issue. “At the previous Expo Real in 2019, sustainability often seemed to be a nice bonus,” says Shamsrizi. “This year it moved centre stage.” 

One visible sign of a green approach in the property sector is the trend towards wooden buildings, which has spread beyond the fair boundaries to around the Bavarian capital. Five kilometres northwest of Munich’s exhibition centre is Prinz Eugen Park, a recently completed development featuring about 570 wooden apartments – Germany’s largest timber housing estate. And this trend isn’t only happening in Munich. In Hamburg, city architecture firm Störmer Murphy and Partners is building the 19-storey, 65 metre-high Roots tower, which will be Germany’s tallest wooden high-rise when completed in 2024. “We are going to use 5,500 cubic metres of softwood, which is enough to fill two Olympic swimming pools,” says partner Jan Störmer. This benefits the environment in two ways: it minimises the use of energy-intensive material such as concrete and steel, saving as estimated 26,000 tonnes of carbon dioxide in production, transport and disposal throughout the building’s lifecycle; and it stores about a tonne of co2 for every cubic metre of wood.

Even more ambitious construction is envisioned in Berlin. On the site of the recently decommissioned Tegel Airport, the city plans to erect 5,000 wooden apartments in the world’s largest residential district using timber as a primary material. Berlin hopes that new technologies will make the large-scale use of locally sourced wood up to 25 per cent cheaper than a conventional construction based on reinforced concrete, while saving 80 per cent on emissions. Nationally the boom in timber construction is evident too. According to the Federation of German Carpenters, the share of wooden houses among newly planned apartments has risen from 16 per cent in 2015 to almost 21 per cent last year. 

“Another push for greener buildings will come from regulation,” says Tobias Just, head of the International Real Estate Business School in Regensburg and a panel moderator at Expo Real. In fact, Germany’s likely future government – a centre-left and green coalition – is expected to pass a mandate for most newly planned buildings to be fitted with solar panels. More concretely, the EU has made substantial progress in setting its so-called taxonomy, which grades investments according to their sustainability. “Banks will increasingly look at environmental criteria when they assess credit requests,” says Just. “That will reduce the borrowing costs for buyers of green buildings and possibly boost their value.” 

Several companies at Expo Real also presented integrated approaches towards the idea of a “smart city”. One example is Vienna-based Payuca. In 2017 the start-up launched an app to make the city’s estimated 17,000 unlet car-park spaces in underground garages available to motorists looking for short-term parking. At this year’s Expo it presented a new service that builds on its expertise and fits garages with charging stations for electric cars. “We are the equivalent of an internet provider but instead of wi-fi we provide a charging service,” says Wolfgang Wegmayer, Payuca’s cco. “At the request of residential property managers, we lay electric cables and design the load management for a building’s power supply.” Long-term users of the carparks can then use newly installed wall boxes to charge their vehicles at Payuca’s subscription rate, starting at €30 per month. “Motorists get easy access to charging and property owners have no hassle with the billing,” says Wegmayer. 

Another approach linking hardware and software to improve the efficiency of large buildings, such as shopping malls and factories, was presented by Munich-based Hiper IT. “We set up controllers to collect real-time information from sensors, measuring things such as electricity use, temperature and humidity,” says Arseny Tarasov, the company’s ceo. The firm uses that data to create a live digital simulation of the building, which helps to recognise patterns of operation, revealing which part of the ventilation or heating should be adjusted, for example, to save energy or improve air quality. “These adjustments make buildings more efficient, pleasant to use and easier to maintain,” says Tarasov. 

These ideas are part of the industry’s new take on innovation. “A few years ago there was always a big hype about digitalisation at Expo Real,” says Just. “That has now been replaced by a more sober attitude – but also by far more mature and promising solutions.”