In the real estate industry, there seemed to be only one direction in recent years: upward, and quite steeply. But Corona, the Ukraine war and the resulting supply chain problems have brought the boom to a standstill, and materials and capacities are in short supply.
Where do things go from here? What developments will shape the market in the coming years? And how will companies' consulting needs change as a result? We asked Matias Otto about this. As a partner, he has been responsible for the "Real Estate" division at enomyc since 2021. His focus is on land and real estate transactions with numerous interfaces to real estate-related advisory mandates and, in particular, to distressed M&A.
Mr. Otto, you studied architecture in Braunschweig and Florence and were then employed at one of the most renowned addresses in the architectural industry. Did you never regret leaving this creative environment?
Let's put it this way: It was a wonderful time that I wouldn't have miss for the world. I graduated with one of the two protagonists of the office and then had the chance to start working there directly. My work was the fulfilment of a wish, not to say a dream of mine.
You later studied real estate economics while working and switched to project development before moving into consulting. How would you describe this change of perspective?
There are differences and similarities. To start with the similarities - and this is what makes the field of real estate, architecture and planning in general so exciting: every task is new, every property and every "product" differs from the other in quite a few dimensions. Despite almost 25 years in the industry, I've never once been bored.
But of course there are also situations in which you benefit greatly from the change of perspective, i.e. the differences. For example, it is certainly an advantage for me that I spent my first seven professional years as a planner. As a result, I know how a property "works," how the different trades interlock, where the interfaces and challenges lie.
As a developer, on the other hand, you have more of a generalist management function. As the client's representative, you accompany the development of a property, work with the various players, but always have to keep an eye on economic and legal aspects. All this experience, the planning experience and the real estate experience, now benefits me in consulting.
How do your customers benefit from this?
In us, they have a partner who supports them in complex issues - including those that our competitors often don't dare to tackle. It is precisely in these situations that we can develop our potential to the full, because we have all the other experts who may be involved, such as restructuring or financing experts, for example for sale-and-lease-back projects, experts for insolvency law or distressed M&A.
Conversely, this does not mean that we do not also accept mandates that are simpler, for example, transactions with a manageable level of complexity. Basically, we are positioned in such a way that we can make the most of our expertise when it comes to larger issues that are interlinked at numerous levels. We offer the know-how that clients would otherwise have to buy in from various specialized boutiques from a single source.
Would you say that this is what sets real estate consulting at enomyc apart from the competition above all else?
I don't think there are very many providers in the market who, have such a deep real estate-specific understanding as consultants and, at the same time, a comparable track record in performance-based consulting, that is, an understanding of the entire business. Especially when you think of conversions, transactions and similar tasks, they always have to be seen in the context of the company's overall development. Where does the company actually want to go, where does it currently stand in terms of performance, and how can the real estate division possibly help to achieve the goals that have been set? This comprehensive perspective clearly sets us apart from most of our competitors on the market.
What developments do you think will shape the real estate sector in the next few years?
What distinguishes the current phase from others is that so many things are coming together. Of course, there have been cycles in the real estate industry and there have always been smaller and larger crises, such as the banking crisis in 2008. But at the moment, the crisis is almost the "new normal" because all the macro issues such as Corona, the supply chain problem, the war in Ukraine, etc., are all leaving their mark on the real estate industry as well, especially in terms of construction costs and construction capacities, and thus indirectly in the contractual relationships of those carrying out the construction, developers and investors.
Construction costs are currently rising at a rate we could never have imagined before. This in turn can lead to problems in the companies, keyword prolongation of financing of current developments, keyword risk-return analyses of project developers, but also of those who ultimately execute it, i.e. the construction companies. I therefore assume that the systematics of construction contracts will increasingly develop in the direction of price escalation clauses at many positions. Under these circumstances, no one can seriously guarantee real price certainty any more, at least not over the usual long project period.
The development is similar with regard to construction capacity. The question of how many cubic meters or how many euros can be built per unit of time is now calculated quite differently. This in turn has an impact not only on the company side, i.e. on those who build, but also on the project developers or builders, because they can no longer promise their end customers without risk that a project will be ready by the deadline and what it will then cost, as they used to. It's all much more volatile now, both on the cost and on the time side - and it's not going to be any different for the foreseeable future. From my point of view, this will lead to changes in the contractual system. What do these changes mean for enomyc?
Where do you want to set your strategic focus in the next few years?
This is not meant to sound cynical at all, but if the sea gets rougher, then we may be in even greater demand. The need for consulting will continue to grow. Others can handle a classic transaction as long as the task is clear. But when the going gets tough and things have to move fast, and when it's precisely our expertise that's needed to analyse difficulties and offer solutions, then we're the right people. I therefore believe that we have a good chance of making further inroads into this market and establishing ourselves as a force to be reckoned with over the next few years.
The two sales of major shipyard sites at the beginning of this year show that we are making good progress on our growth path. And they are a good example of how our customers benefit from the interplay of corporate and real estate expertise, i.e. our original enomyc profile.
Thank you very much for the interview, Mr. Otto.
