Degi has drastically reduced its forecast for the German real estate investment trust (G-REIT). Initially, it was considered reasonable that the tax-friendly vehicle introduced in 2007 would see market volumes of EUR 50-60bn. But in a new report, Degi- the German property investment fund manager owned by UK-listed Aberdeen Asset Management - says it expects the value to be far lower.
Degi has drastically reduced its forecast for the German real estate investment trust (G-REIT). Initially, it was considered reasonable that the tax-friendly vehicle introduced in 2007 would see market volumes of EUR 50-60bn. But in a new report, Degi- the German property investment fund manager owned by UK-listed Aberdeen Asset Management - says it expects the value to be far lower.
The G-REIT was hit by disappointment early on when the Social Democrat-Christian Democrat government in Berlin excluded residential property from the scheme for political reasons. Now the economic climate is also unfavourable, Degi said. 'Given the prevailing market realities, something along the lines of EUR 15bn at most appears to be much more realistic in our view until the end of 2010.'
While over a dozen German real estate companies were toying with the idea of converting to G-REIT status in the run-up to it becoming law, only two have done so. Alstria Office and Fair Value own property valued at a total of EUR 2bn.
