GERMANY - The German commercial real estate market is one of the most attractive in Europe as local banks are recovering strongly and willing to provide debt.
According to Hatfield Philips International, German banking institutions are less reluctant than their European counterparts to lend debt in spite of the difficulties they faced during the financial crisis.
Stewart Hotston, director at Hatfield Philips, said: "Pension funds are currently wondering whether it is a good time to invest in commercial real estate or not, as they are still looking to invest in inflation hedge assets.
"The sector still presents risks due to low loan interest rates, a growing inflation and a high volatility. But we have to make a difference between the UK and other European markets. Contrary to the UK, where we see property prices going up and a slower economic recovery, other jurisdictions such as Germany show growing confidence."
In a recent study, the loan servicer found that Germany was the most attractive jurisdiction in Europe for borrowers and was the second most attractive markets for lenders after the UK.
In March, CB Richard Ellis published a survey showing that investors are shifting their interest toward Germany and Central and Eastern Europe.
John Welham, head of European retail investment at CBRE, said: "Prime retail property has recovered in value in much the same way as office property so that the more economically stable markets have seen the greatest recovery. Prime shopping centres in Germany, for example, are now trading at yields very close to the peak of the market in 2006."
Last year, 15 new shopping centres were opened in Germany.
The last example of a pension fund investing in a commercial centre in the country was seen in May this year.
The CPP Investment Board acquired a 50% stake in a German regional shopping and leisure centre CentrO Oberhausen through a joint venture with the Stadium Group.
