Germany’s public investment plans set context for deal-by-deal strategy

Gereon Kohlgrüber, managing director and head of investments, Germany at AEW, the global real estate investment management company, says real estate investors must stay disciplined and detail-oriented despite Germany’s shift toward large-scale public investment.

“Currently, we are in interesting phases. So generally speaking, number one, we have a new government, which is elected. Secondly, they have already announced that they wanted to invest €500 billion in the German infrastructure and digitalisation, another €500 billion into defence.”

However, market activity is returning to fundamentals. “It’s as ever. I would say it’s getting back to normal. You need to look on every deal, deal by deal basis. You need to underwrite every asset.”

Having local knowledge is essential. “You need to look [for] a local team on the ground, which has strong knowledge of the different market segments and different teams. And then you are prepared to invest in Germany.”

Kohlgrüber highlighted AEW’s current focus. “We are currently investing a lot in logistics and light industrial. That’s what we’ve done with AEW many years. Also investing now into residential. We currently bought a portfolio in Frankfurt.”

Office remains part of the strategy. “I mean, there’s a change currently — flight to quality. So we are looking for class office building on the one hand. But also we are thinking to reconvert older buildings.”

Retail is back on the radar. “And finally, retail, especially big box retail, is an interesting part and very selected high street retail.”