German funds set to release billions worth of assets in market squeeze

A 'substantial volume' of good-quality assets is set to come up for sale in Germany as some of the beleaguered German open-ended funds liquidate their portfolios. One of the more publicised disposals is the Quartier Potsdamer Platz property portfolio that SEB is marketing in Berlin. SEB is seeking to sell a 50% stake in the portfolio which it acquired in 2008 for EUR 1.4 bn.

Timo Tschammler, outgoing country head at DTZ Germany, estimates that in Germany alone about 160 assets will come from the distressed open-ended funds. While the total value of these properties is unknown, market estimates put it at ‘many’ billions of euros. An equivalent number of assets are also expected to hit the markets from the same sources in France and the UK.

Market watchers also see several bigger shopping centres valued at between EUR 100-250 mln in Germany's big cities coming up for the sale within the next quarter with expected yields ranging between 5-6%. A number bought by foreign investors during the boom years now require refurbishment and the owners lack the necessary funds.

Despite the expected flow of product, the battle for top office and retail assets will certainly heat up, says Fabian Klein, head of investment at CBRE Germany. And while product could potentially become scarce, he noted that he had not seen anything ‘crazy’ yet in terms of prices. The attractiveness of German offices is that they are 100% index-linked, he added. The figure for retail is somewhat lower at 60-80%, but market watchers agree there is still some room for rental increases in Germany.

The full article appears in the April edition of PropertyEU Magazine. Click on the link below to order your copy now