AXA Real Estate scouts for big-ticket assets in Germany

AXA Real Estate will focus on acquisitions of over EUR 150 mln in Germany on behalf of sovereign wealth funds eager to increase their exposure to the German market, Matthias Leube, AXA Real Estate's head of Germany told PropertyEU.

'We are looking for existing offices or shopping centres as well as for new developments on behalf of a wide range of sovereign money sources,' Leube said at the Mipim trade fair in Cannes. AXA Real Estate's clients include SWFs from Asia, North America and Northern Europe.

Leube, who manages EUR 5.3 bn of assets on behalf of AXA Real Estate Germany, added that the company will also be targeting smaller assets in 2012, largely retail, office and residential assets of EUR 20-70 mln which would be of interest to existing funds.

Commenting on the outlook for the German investment market, Leube noted that large foreign investors are being drawn increasingly to the German market which offers security from a macro-economic point of view as well as stability on a property market level. He added that some investors see the weak euro as an opportunity. 'They believe there is still growth to come in the German market,' he noted.

While yields for core assets are expected to remain at the current low level, Leube said he anticipates a softening of yields of core-plus property in 2012. 'We expect an adjustment of prices in the core-plus sector this year which is currently trading at around 6%.' Leube said. 'Prices for this type of product are forecast to soften, and the gap between vendors' and buyers' expectations is likely to narrow. The interest in absolute prime investment will continue to be high.'