More distressed assets to hit German market

Real estate investment volume is set to increase to some EUR 24 bn in Germany this year, according to Timo Tschammler, managing director of DTZ Germany. 'We won't see the massive increase we saw last year, but overall, market sentiment has improved slightly compared to 2010,' he said in an interview with PropertyEU ahead of the opening of MIPIM, the world's largest real estate fair which gets under way in Cannes on Tuesday.

In 2010, DTZ registered some EUR 18 bn of investment transactions, marking an increase of 80% year-on-year. 'The news from Germany is still good. On the occupier front the picture is mixed, we're seeing some modest growth or stabilization. But we're also seeing speculative development taking off again, that's definitely good news.' Tschammler said he saw more product coming to the market from four key sources. 'A number of open-ended funds have openly announced plans for liquidation and others that are still frozen will not be able to re-open without liquidating or refinancing some of their assets,' he noted.

At end-2010, Degi (a unit of Aberdeen Asset Management), KanAm and Morgan Stanley's P2 Value Fund all announced liquidation plans. KanAm's plans revolve around its US fund. One of the most prolific deals in this context was Degi's sale of it's Hurth Park shopping centre in Germany to a joint venture of Canadian pension scheme CPPIB and LaSalle Investment Management for EUR 157.3 mln in November 2010.

More distressed loans and assets will also hit the market in the coming year, Tschammler predicted. He sees three key sources: special services companies, distressed loan investors and banks. 'They will be a dominant factor this year,' he said, adding that a lot of activity was occurring off-market. 'A growing number of assets are being brought to the market by special services companies, rather than the borrower or bank. That indicates that the banks have gained control of the assets.'