GERMANY - Population decline will transform the German office and retail markets - but investors have largely ignored demographic trends they routinely factor into residential investment decisions, according to Deutsche Bank head of real estate research Tobias Just.
Speaking at an Expo Real panel session on demographic trends in commercial real estate, he said: "A few years ago, when I started tackling demographics in relation to the office market, people were surprised."
"But the question of how long we're all going to work is relevant to the office market. So is the fact we'll need to invite students from overseas to our universities, which means campuses need to be fit for purpose," he said.
Tobias Just, who also holds a professorship at the University of Regensburg, acknowledged the precise impact of a decline in Germany's working-age population was as yet uncertain.
While a 10m reduction in the number of potential employees would drive up wages overall, the trend was more likely to shift jobs overseas than to increase immigration.
"We won't invite 400,000 Chinese workers to come to Germany each year - we'll just outsource the jobs to China," he said.
One difficulty is that demographic forecasts extend beyond even long-term investors' investment horizons.
Maria-Teresa Dreo, head of German real estate at Hypovereinsbank, said more sophisticated investors were likely to take demographics into account.
"But investors can't make 15-year forecasts, regardless of what the investment is. They'll need to cooperate with those who can."
However, Dreo cautioned against overstating demographic shifts at the expense of consumer patterns.
"If we're looking at demographic changes, does that only mean the shrinking population?" she asked.
"When we make lending decisions, we take behaviour into account as well."
At least in retail, ECE project manager Dirk Siebels said demand for space in specific locations - specifically those with strong catchment areas and "hip locations close to metropolitan areas" - would in any case withstand demographic shifts.
In the meantime, ECE will focus in Germany on managing existing assets and focus its development efforts on emerging markets such as Turkey.
"Turkey has a young population, and there's an economic upswing," Siebels said. "It's a very interesting market for us."