GOEFs' liquidation creates EUR 20b of opportunities: DTZ

Around EUR 20 bn of commercial real estate assets will come to the market as a result of the German open-ended funds' liquidation process, according to a new research report published by DTZ.

With 13 German Open Ended Funds (GOEFs) now in liquidation and five others remaining frozen, DTZ forecasts that forced sales by the industry will represent 8% of annual investment volumes in Europe. The agent is also anticipating decline in capital values in some European markets in particular, Southern Europe and Benelux, which will face an over-supply of investment opportunities.

Since their return to the market in 2010, GOEFs have sold EUR 5.7 bn of assets across Europe. They were mainly active on the office sector (EUR 3.9 bn) with a specific focus on the German, French and UK markets.

According to the report, the biggest sales volumes will come from CS Euroreal (EUR 5.3 bn), SEB ImmoInvest (EUR 4.8 bn) and KanAm Grundinvest Funds (EUR 3.5 bn).

'The key question is whether local markets can absorb these future sales without a negative impact on pricing,' said Magali Marton, head of CEMEA Research at DTZ.

The net asset value of GOEFs is unevenly represented among European regions, the broker added, with the ratio ranging from 4% in Nordics to 29% in the Benelux. Among the three core markets including France and the UK, Germany has the highest exposure at 13%.

As of September 2012, 612 properties around the world were held by GOEFS in trouble. Marton: 'These portfolios account for over 9 million m² of leasable space of which 8.2 million m² is located in Europe.' The office sector is the favoured property type across the portfolio of GOEFs in liquidation. The retail sector ranks second with 1.6 million m² of space.