BRIEFING Panel outlines success factors for German property investing

The forward-looking investor will choose flexible buildings which can be converted or adapted according to fluctuating market demands, pay attention to transport links, implement a sustainability strategy and invest in a good team on the ground, knowing that these factors combined will maintain the value of the property over time and will allow him to charge premium rents.

Assets obviously matter but property is a ´people business in the end and nowhere more so than in Germany,´ said Georg Orlich, Director of Corpus Sireo Asset Management. 'The less core the property, the more attentive an asset manager it needs.'

Good property management is crucial especially in the office sector, where there is good availability and many vacancies and therefore tenants have a choice and can vote with their feet.

'The difference between a fully-let building and a building with a lot of vacancies is invariably good asset management, those property managers who are able to maintain a good relationship with the tenant,' said Karsten Kohlmann, Managing Partner at Waterway Investments. 'Technical experience is very important in the German market, and investing in a good team is always a good investment.'

In general, said Kohlmann, the signs are that investors have learnt from the crisis and ‘now are not just interested in the deal itself, but they also think seriously about the follow-up.'

The sustainability of an investment can also rest on its green credentials, said Christiane Conrads, partner at Lupp & Partner, a Munich-based boutique law firm: 'It is an issue that will become more and more important and the number of green building certificates and green leases is already increasing. Implementing a sustainability strategy is good risk management and it will pay,' she said.

The German government has stepped up the promotion of renewable energy sources since the 2015 Paris Climate Conference, and the goal is now to have completely carbon-free energy sources in the building sector by 2050. But change is not just imposed from above but also driven from below. In the shorter term sustainability will be driven by tenant demand.

´It is increasingly seen as customer service, as an essential component of the quality of the premises,’ Conrads said. ‘The message investors need to understand is that in the end it will not cost more, and that the investment is worth it, as among other advantages it prevents legal disputes, increases the value of the building and leads tenants to stay longer in the premises.´

It is still the case, even in Germany, that some funds want to focus more on returns and see sustainability mainly as a burden and as a cost, but in the end they will have to give way to tenants’ demands, Conrads said: ´It may take a while, but investors in the end will have to deliver'.