A Conversation with Willi Kluge of EDSI
How the real estate market in Dresden is changing and why networks are crucial
Willi Kluge is the founder and CEO of the ESDI Group. Initially, ESDI focused on the traditional brokerage business, but quickly moved on to investing in real estate themselves. After creating a holding structure, the company was then able to add asset management, portfolio management and subsequently project development to its areas of focus.
What particularly appeals to Kluge about real estate brokerage is that it is a people business, where you not only bring people together with real estate, but also people with people. In our interview, Kluge talks to us about the Dresden location, his assessment of market trends and his approach to challenges in the construction sector and project development. Find out more in the podcast and in the following article:
Real Estate Market in Dresden: Trends and Potential
According to Kluge, Dresden has developed into a top location in eastern Germany since reunification. Kluge sees particular potential in rents: Despite the positive developments, the rent level is still below the national average, which offers potential for further increases. Another plus: the planned expansion of a chip plant by Taiwanese manufacturer TSMC and the “Silicon Saxony” cluster could attract around 30,000 new residents by 2030. As construction activity is stagnating, purchase prices could rise as a result. Kluge cites central and middle-class districts such as Dresden-Striesen and Weißer Hirsch as particularly exciting districts with attractive development potential. Nevertheless, he emphasizes that none of them should be categorically excluded, as the entire city area is benefiting from the developments.
Real Estate Market Shows Signs of Recovery
The effects of the Ukraine crisis in 2022 and the rise in interest rates have posed major challenges for the real estate sector. ESDI also noticed that buyers were dropping out due to the high financing costs and that only buyers with a lot of equity were still able to afford properties. However, Kluge is optimistic: since mid-2024, demand has been rising again, both in the investment segment and in the private sector. “The music is playing again, people are starting to dance,” says Kluge.
Hurdles, Opportunities & Must-Haves in Project Development
When asked where he focuses in project development, Kluge answers that ESDI's focus is on the revitalization of vacant residential properties and the purchase of residential portfolios. Thanks to the good networks of craftsmen, it is possible to carry out modern refurbishments that benefit both investors and owner-occupiers. ESDI's long-term investments focus on potentials such as commercial properties, whose returns can be significantly increased within three to five years through targeted measures.
Kluge sees the biggest hurdles in project development primarily in rising financing costs and delays in project approvals. These can lead to complications, construction stops and the like, which can be frustrating. Approvals, e.g. for structural changes such as roof extensions or elevators, can often take over a year - and even a year is still quick for some projects and regions. Nevertheless, a positive trend is emerging in Dresden: shorter processing times and more customer friendliness thanks to a new generation of urban planners give Kluge hope that these issues could improve in his city in the future.
Another important topic: networks. For Kluge, successful projects and transactions are inconceivable without a strong network. Estate agents, notaries, tradesmen and other players contribute their respective strengths to drive projects forward. For Kluge, trust and long-term collaboration are essential to mastering complex challenges.
Looking Forward
Sustainability is becoming increasingly important. Renovations and new builds must be geared towards long-term energy efficiency and funding opportunities in order to remain marketable. Digitalization is also playing a growing role for Kluge. Virtual viewings and modern CRM systems make work easier, but the industry has some catching up to do compared to other sectors. Basically, Kluge hopes that Europe, with Germany as a strong player, can once again develop more strongly in the real estate sector and that processes can be streamlined in order to pick up speed again. Accelerated approval procedures, simplified building regulations and targeted investment in new construction could lower the hurdles for property developers. He believes that strengthening Germany as a business location and focusing on digital transformation are key to reviving the market in the long term.