German investors stick to home market

German investment into France is unlikely to increase in the next 12 months, according to Kai Schubart, director of international client management at Corpus Sireo Asset Management Commercial. German investors remain very focused on their home market, he added. ‘About 80% of investment volume is domestic in both core and regional markets.’

Schubart made the comments at PropertyEU’s Outlook 2013 Investment Briefing in Paris at end-November. Total investment volume in Germany is expected to roughly match last year’s figure of EUR 20 bn. In contrast to 2011, however, offices and residential will account for a higher share of the total than retail.

With LTVs continuing to fall, the amount of equity invested overall is still high comparatively speaking, Schubart said. ‘The amount of equity invested is not much lower than in the boom years because of the lack of leverage. Financiers are also looking more closely at who’s running the properties, there’s more detailed scrutiny. It’s not as easy as it was before.’

While investment has focused primarily on the Big Five cities, sustained demand and scarce supply is pushing investors further afield, he said. ‘Regional cities are an upcoming area. It is possible to find yields there outperforming the Top 5 in Germany. You might not see yields of 9 or 10%, but you may find 7-8%.’

With the notable exception of Norwegian heavyweight NBIM, Nordic investors are also sticking to their home territory, noted Emmanuel Schreder, deputy CEO of Catella Property Group. ‘Investors in the Nordic countries have acted very locally these past 10 years and are very cautious about investing in Europe and France. Only two or three are looking at the French market.’

The full story appears in the December issue of PropertyEU Magazine. Click on the link below to subscribe