Germany sees renewed interest from international investors

International investors are set to come back to the German market in their search for less volatile markets offering good real estate product. 'The international community is starting to re-appreciate the German market,' Marcus Lemli, head of JLL's capital markets in Germany told PropertyEU in an interview at Mipim on Wednesday. 'We are starting to see renewed interest from UK and American investors as well as from Asian and Middle Eastern sovereign wealth funds,' he added.

The German investment market has changed tremendously over the past three years. While international investors represented the lion's share of investment in Germany in 2006, accounting for roughly 80% of total volumes, they were behind just 20% of investment deals last year, Lemli said.

But as markets such as the UK become more expensive due to increased competition, more and more international players are putting Germany at the centre of their investment strategies. Lemli: 'This choice is also motivated by the outlook for the occupier market, which continues to be quite stable compared to others in Europe.'

A number of investment opportunities are already opening up as troubled retailers such as Karstadt and Woolworth look to surrender some of their city-centre premises. 'These properties will offer new opportunities for redevelopment in the heart of the cities,' Lemli said. In 2010, the market is forecast to see growing levels of activity in the retail sector, with high-street, shopping centres and retail warehouses leading the way. Lemli: 'Retail will be the winner in 2010.'

Three large retail transactions closed in the first two months: the sale of Alexa to Union Investment for more than EUR 300 mln, the sale of Die Mitte to Commerz Real and the sale of the A10 mall for EUR 265 mln.