Spain and Ireland make a comeback on investors’ wish lists

The Spanish real estate market offers some attractive opportunities for European investors, according to panelists at the PropertyEU Outlook 2013 Investment Briefing held in Frankfurt on Tuesday. All in all, three of the five panelists said they would invest a portion of a theoretical €500 mln in Spain while a fourth panelist pointed to the renewed potential of Ireland.

Gerhard Meitinger, Head of Real Estate Finance Germany at Pfandbriefbank AG, said he would allocate 50% to countries outside Germany. ‘I would invest in well-located retail assets in Spain and also CEE, in particular Prague.’ Meitinger said he would invest the other half of the sum in residential and retail in Germany. ‘I’m not convinced long term about logistics. As for offices, there aren’t enough core assets around. Yields are too low - or rather prices too high.’

Thilo Wagner, Head of Property Investment at Henderson Global Investors’ German office, also has a penchant for retail in Spain. Pointing to a recent offering of a retail location in Madrid occupied by jeweler Tiffany & Co, Wagner said he believed there were good opportunities on the Iberian peninsula. ‘A retail deal in Madrid with Tiffany as a tenant for 15 years for a yield of 6.5%, I would like to do that.’

A similar retail deal in Germany would cost at least 200 basis points more, he pointed out. But with Southern Europe more or less off limits for many pan-European investment houses, he conceded that in the real world it would be difficult to get such a deal signed off by an investment committee.

Stephan Kock, Partner and Head of International Finance at law firm Ashurst, said he would also head for markets not currently in fashion like Spain and avoid hot spots like German resi.

Marcus Cieleback, Head of Research at Patrizia Immobilien likes existing residential stock in Germany as well as dominant retail assets in smaller regional cities. Outside Germany, Cieleback said he favoured residential and office in Ireland as well as mixed use assets in the Nordics. ‘It’s an interesting point to enter the Irish market,’ he noted. ‘There has been no construction in Dublin for the last three to four years. There’s quite some potential in this market.’

Annette Kröger, Head of Acquisitions at German insurance giant Allianz, said she would spend the bulk – or 60% - of her theoretical €500 mln in France and Germany, 20% in Polish retail and 20% in the Nordics, in particular Sweden. ‘I would invest mainly in retail and a little bit in logistics for a higher yield.’

The inaugural PropertyEU Investment Briefing in Frankfurt was held at the OpernTurm office of law firm Ashurst. It formed the final chapter of a series of Outlook 2013 briefings organised by PropertyEU over the past three weeks in London and Paris. A full overview of these events and the key takeaways will appear in the December issue of PropertyEU.