Germans 'selling assets too cheaply' - MAB executive

With all the current interest from foreign investors in the German property market, Germans may be selling their assets too cheaply, Jan G. F. Eijkemans, managing director international of Bouwfonds MAB, has warned.

Commenting on the widespread perception that German investors are full of 'angst' during an Urban Land Institute panel discussion in Frankfurt am Main last week, Eijkemans said 'I think the Germans are not afraid.

They're only afraid that they're selling their assets too cheaply to all the international players at this moment.'

'I'm very surprised to hear how everyone talks about leverage and cap rates but they never really talk about real estate, about the market,' he said. 'There's so much money flowing into this market at the moment that people forget all about real estate and the developer.' He emphasised the importance of developers, saying 'without a developer there's no asset management.'

He was critical of the over-heated German market. 'If you see what the international developers are buying at the moment in Germany, I won't say it's crap, but it's old assets,' he said. 'They need to make some kind of investment in order to make it happen, to make some returns.'

'As the Americans say, you can put lipstick on a pig, but it's still a pig, which means you have to do more,' he said. 'I sometimes wonder who is really making the money here,' he commented, giving the example of Blackstone's recent record-breaking acquisition of the Equity Office Properties Trust for $36 bn (EUR 28 bn) in the US. 'How can you do due diligence on a $36 bn deal?' he asked. 'For me that's unbelievable.'