GERMANY - Fidelity is shifting its pan-European real estate operations to Munich, in an expression of confidence in the recovering German property market.

The fund manager announced the move with the €17.85m acquisition of an office block, let to Olympus Life Science Research, but owned for the pan-European real estate fund and gives a yield on the deal of 5.9%.

Keith Sutton, director of real estate at Fidelity, cited southern Germany's status as "a distinct economic powerhouse" as a key reason for locating in the Eurozone's largest economy.

"It's the most significant centre for institutional fund management in property," he said.

He also believes Fidelity's relative status as a newcomer in real estate markets will be no hurdle.

"The client potential is considerable. We hope to piggyback from the fund management side to offer new products."

He continued: "Real estate is always a bit different from other assets. You have to know what's happening. It's tangible; it's touchy-feeling, and we're placing the fund with German institutions. Acquisitions will be off-market and we want to populate our offices for local deals."