Investors are more selective but still attracted to Germany

Institutional and alternative investors are still showing a lot of interest in German real estate because they see it a safe haven, Nadja-Christin Hoppe, Executive Director/Head of Sales & Corporate Finance. CORESTATE Bank told Real Asset Media’s Richard Betts.

Investors are being more selective because of all the uncertainty in the market so they tend to focus on existing buildings that they can refurbish or reposition, so they can plan better. Buying a green field and having to wait for planning permits for up to five years is not seen as an attractive option, “because no one known what will happen to construction costs in five years’ time”, she said.

Borrowers tend to focus on the main cities in Germany and within the cities “the micro location is becoming more and more important”, she said.

As to sectors, Corestate Bank is seeing a lot of financing requests for residential, hotels and retail. “Because the markets are so challenging at the moment I wouldn’t say it’s impossible to get financing for these asset classes, but it’s definitely more complicated compared to previous years”, Hoppe said.

“We are still in a challenging market situation as we are seeing rising interest rates, rising construction costs, high inflation and the war in Ukraine, so on the lender side  we are definitely seeing that the banks are being more conservative and sitting on the sidelines”, she said. Everything takes longer than it used to.

“At Corestate bank we are trying to create the best possible fit, a tailor-made solution for both sides and we are definitely seeing even more attractive risk-return profiles which normally would have been financed by banks”, she said.

Click on the video above to watch the full interview