CBRE: German funds will be back

German open-ended funds, which have been forced to halt redemptions temporarily, will start returning to the market towards the end of the second half of 2009, predicts Nick Axford, head of research at the world's biggest adviser CB Richard Ellis. 'The underlying confidence in the sector is still good,' he said, pointing out that the unexpected wave of redemptions that a number of German funds witnessed in September and October was prompted by the desire for capital preservation rather than a crisis of confidence in property.

'The outflow had nothing to do with property fundamentals, but was prompted by Merkel's guarantee for all bank deposits,' he said. 'I have a measurable degree of optimism for the medium term. The German funds will be back.'

Axford made the comments during an interview at the Mapic retail trade fair in Cannes last week. While conceding that the economic downturn would continue to hold back deal activity for some time, he said the situation was not absolutely dire. He pointed out that the level of deals recorded in the first nine months of 2008 were around the levels seen in 2004 and 2005.

'I'm not denying that there is a slowdown, but it's not as bad as some people are saying. Moreover, there is a growing acceptance that numbers must become more realistic. Repricing is well under way, particularly in the UK, but we will also start seeing it across Europe. There are some opportunities out there. In the UK, there are some products around that haven't been on the market for a long time and we will also see some opportunities in Central and Eastern Europe.'