The need to upgrade assets to meet higher ESG standards presents international investors with new opportunities in Germany during 2023, said Alexander Lehnen, partner, Arnecke Sibeth Dabelstein.
Lehnen said the last decade has seen mainly institutional investors coming to Germany to invest in landmark assets or logistics real estate investments but a new decade of private equity investments will be possible. Cap rates of older brown assets will decrease significantly within the next six to 12 months, Lehnen said. Turning these assets into ESG- and taxonomy-compliant assets that that match the criteria of both German and international pension funds and investors will be a major opportunity.
As German institutional investors only want to invest in high quality ESG compliant assets and do not want to do the work of transforming old assets themselves it provides a substantial opportunity for international investors and developers who can do the work and sell upgraded buildings to German institutions. “They do not like to do the homework of transforming the old assets to new assets and that’s a large opportunity for international investors coming to do this exercise and then sell to German institutional,” Lehnen explained.
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