There is a strong and growing appetite for German real estate in Asia and Europe’s safe haven is becoming the first port of call, delegates heard at Real Asset Media’s Germany Investment Briefing, which was held on Tuesday at PwC’s London headquarters.
‘Europe is very appealing to our investors and Germany has a particularly good reputation’, said Loh Boon Chye, CEO of Singapore Exchange, Asia’s most international Stock Exchange. ‘Asian investors like to have in their portfolios a mix of asset classes in different countries. The region’s sovereign wealth funds and pension funds in particular have been increasing allocations to real estate, and as they are long-term investors that will provide support in any possible future downturn’.
Because they tend to invest for the long-term, Asian investors make careful and well-pondered choices, said Markus Beran, Head of Origination International Investors, Berlin Hyp: ‘They have an incredibly in-depth look at the asset before committing and often team up with German investment managers to have the local expertise’.
Michael Becken, managing director, Becken Invest, said that Asian investors ‘are afraid of making mistakes, so they are very picky and look carefully to find the asset that is right for them’.
‘The German market has fantastic fundamentals but it is very expensive,’ said Richard Divall, Head of Cross Border Capital Markets, EMEA, Colliers International. ‘South Koreans, for example, are very active all over Europe but they want returns above 4%, which are very difficult to get in the German cities’.
Canadian investors are also very active, but they have the same problem, Divall said, as their prime yields are 4.5% ‘so they are not going to go for less’. In future ‘we will see more Singaporean money going into Germany,’ he said, ‘and also the big Japanese pension will move in, investing both directly and indirectly. There is a real focus on Germany’.
Chinese capital is also coming back to Europe, but in a different guise, Divall said: ‘There will be less trophy hotels and more focus on logistics and assets that are connected to the One Belt One Road infrastructure initiative, which is a real focal point’.
Most foreign investors tend to flock to Germany’s main cities, which they believe will continue to do well in the future. In a recent PwC investors’ survey of top emerging cities in Europe, four out of ten are German – Frankfurt, Hamburg, Munich and Berlin the highest-ranked at n.2, just behind first-placed Lisbon.
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