Total commercial real estate volumes in Germany will probably reach EUR 70-75 bn this year despite the credit crunch, as demand among institutional investors for German portfolios remains strong, property investment group Estavis estimates. Estavis released an upbeat edition of its investment barometer for Germany to coincide with the MIPIM property fair in Cannes.
Total commercial real estate volumes in Germany will probably reach EUR 70-75 bn this year despite the credit crunch, as demand among institutional investors for German portfolios remains strong, property investment group Estavis estimates. Estavis released an upbeat edition of its investment barometer for Germany to coincide with the MIPIM property fair in Cannes.
Rainer Schorr, CEO of Estavis, told PropertyTV that Germany underwent a dramatic 'sub prime crisis' in the late 1990s due to a tax-driven property bubble. Property prices dropped 70% in the east and 50% in the west. The market recovered in 2005.
Over the past six months German property prices have increased by 2-5% on average, he says, adding that the recovery has been even stronger in Berlin, where prices have climbed 6-8%. 'In terms of property, Germany is a safe haven in Europe when compared to Spain, even the UK or France,' Schorr said.
Almost 70% of the German and foreign investors who took part in the Estavis survey want to increase their exposure to the commercial property this year. Schorr said that a lot of institutional investors are already invested in German residential portfolios. Of these, some 70% also want to invest in commercial properties or commercial portfolios.
Competition for properties above EUR 20 mln is fierce and Estavis is buying up commercial portfolios to sell on in packages of between EUR 20-50 mln, a size for which debt financing is still readily available. 'I think the demand for German properties is more or less increasing. But we will not see the amazing transaction volumes of 2006and 2007, where more than EUR 100 bn turnover took place,' Schorr said.
