Speaking to PropertyEU at Mipim, Schenk said markets were currently gripped by uncertainty over the unpredictability of the Russia-Ukraine conflict.

‘The uncertainty in the market at present is enormous,’ said Schenk. ‘We are just coming out of the pandemic and now we have the conflict in the Ukraine. No one knows what Putin will do next.’

The uncertainty has led to stock markets falling, interest rates rising and losses on the bond markets.

‘We all hope the rise in interest rates will come to an end,’ Schenk said. ‘It is detrimental for Southern Europe, it creates pressure on the ECB and they will scale back their bond buying program further.’

Schenk believes that in the current climate, institutional investors will sit back and do nothing for the moment. ‘Whatever they do, someone is going to question it, so they will wait and see. They are building in an investment pause,’ he said.

At the same time Real IS is on a roll. The property investment arm of German lender BayernLB has just sold an office building in Berlin, called Mosse-Zentrum, to Henderson Park. The property, located in the old newspaper quarter next to the Springer Campus, had been part of the Real IS portfolio for eight years and was reportedly sold for €300 mln.

Schenk declined to name the price, but is clearly satisfied with the deal. ‘Real IS has done well,’ he said with a smile.

Business in general is going well, Schenk noted, because private investors turn to real estate in times of uncertainty so capital is pouring in. It means Real IS has to spend it, but that is no problem at the moment. ‘There is more real estate coming to market because everybody is selling,’ said Schenk.  ‘Maybe the market is at a peak.’

As for inflation, Schenk thinks it will remain high. He sees signs of how it is already impacting  markets, such as disrupted supply chains and developers struggling to get building materials and workers.  Ukranian lorry drivers working in Germany have gone home to fight the war, there is an energy shortage, and prices are going up. Construction workers are hard to find in Berlin, car manufacturers now have a shortage not only of chips but also cables and wires. All these seemingly unrelated problems are a sign of uncertainty.

‘We do not know what the effect on the economy will be, but after six or 12 months these things also always affect real estate,’ Schenk said. ‘I am saying: this is the uncertainty we have now. Even after the Ukraine conflict ends, things will never be as they have been before.’