Another expected trend in 2007 is a shift in transaction structures “away from the huge bid wars for big portfolios towards more individual transactions”, according to Frank Lamby. He claims the reason for this is costs. For some bid wars, the costs for due diligence alone are already clearly over a million Euros; this cannot go well for long. Moreover, with 30 to 40 bidders, the question arises whether it makes sense to invest these costs only to end up among the last three, whereby of course only one will get the bid. His assessment is that the number of participants must decrease automatically at some point in time, because too many companies have lost too much money. Particularly with large deals, exclusivity negotiations as well as options for portfolio purchases will play a role. Individual transactions, scattering and individualism instead of giant portfolios will more strongly characterise the transaction market in 2007. Brad Olsen predicts: “In 2007, we will no longer necessarily see the activities of those investors who buy big portfolios or companies, but rather many investors from a number of countries that invest of up to ten to 15 million Euros.” This could be both, smaller investments as well as diversifying larger sums of capital. Brad Olsen thus refers to one of his American clients, who wants to invest a million Euros in Europe and thus in Germany, however, breaking up this amount into smaller investments.

Evolution of topics and mentalities
Furthermore, the real estate industry will focus more on new topics. “Infrastructure is a topic of focus”, Holger Naumann, Managing Director of the Deutsche Bank subsidiary DB Real Estate claimed at the podium discussion “Where are we headed next?” in the conference programme of EXPO REAL 2006. “According to our estimations, a market could develop here that could be as large as the entire commercial real estate market.” Holger Naumann stressed the “long-term cash flows” and the “long-term supply contracts” as exceptional factors, and noted that, for example, compared to Australia, Germany still has a lot of potential from this perspective. His company has already set up an infrastructure fund for institutional investors, but for the future he sees a “challenge for fund builders to make this asset class accessible for private customers”, particularly in context with retirement-provision. “These are new asset classes that are definitely interesting to us”, says Holger Naumann.

Generally, real estate as its own asset class will continue to grow in 2007. It is no longer on the outskirts, but is equal to stocks, bonds and other asset classes. Thus, a fundamental evolution in the perception of real estate has taken place. Previous “buy-and-hold structures” will lose ground against “real estate as a tradeable good”. What is already common practice in the USA, Great Britain and The Netherlands, for example, requires a shift in mentality in Germany: The motto “what you inherit from your fathers, preserve it in order to own it” will be replaced with active portfolio management. Not only sales are included here, but also active asset management in general.