German investment company Accom is targeting Asian institutional investors in Asia for its first real estate fund.
The five-year Accom German Champion Real Estate Fund is expected to have its first close by the end of this year, aiming to raise €200m and to deploy up to €1bn over a three-year investment period.
It will be seeded with a €400m portfolio of commercial real estate located outside the largest three cities of Germany.
Managing director Stefan Kalmund, currently on a marketing trip to Singapore, told IPE Real Estate: “We are telling potential investors to buy themselves a little piece of Germany – of the areas you really like, where the brands you know and appreciate can be found.”
Kalmund acknowledged London as the natural entry point to Europe for most Asian investors because they are familiar with real estate there. “There isn’t the same degree of familiarity with Germany, and particularly regional German cities,” he said.
He will be impressing upon Asian investors who know the three top German cities – Frankfurt, Berlin and Munich – and may already own buildings there, that the strength of the German real estate market is not concentrated in these cities alone.
“Wealth in Germany is spread across the country,” he said, explaining that famous German global brands operate in cities outside the big three markets.
He said cities like Hanover, Nuremberg, Leipzig/Dresden and the Rhine-Main and Ruhr regions were the “hidden champions” of the German economy.
The brands create jobs, give their local communities purchasing power and attract local government investment through infrastructure, he said.
“The reason we are focusing on Asia is that it has a strong appreciation of German brands and of the economic, political and financial stability and strength of Germany.”
He pointed out that China and South Korea are key trading partners of Germany, and that there are also city-to-city relationships between Chinese and Japanese cities and their German counterparts.
“Another reason is liquidity,” he said. “Asian investors require liquidity, and the German market is the most liquid real estate market in Europe.”
Kalmund said the yield gap between commercial real estate in the top three German cities and the regional cities is typically 2.5% to 3%, boosted by long-term tenancy contracts, usually for 10 years.
Accom, which has been pre-marketing to Asia since July, will now begin marketing its fund to institutions in Singapore, Hong Kong, Thailand, South Korea and Mainland China.
In time, the German real estate manager could also accept separate mandates from large Asian institutions which already have teams focused on research in the German market – or already have relationships with German companies.
Over the past 20 years, Accom has handled around €5bn of real estate transactions on behalf of institutional investors on a deal-by-deal basis, in regional Germany, he said.
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