Tishman Speyer sees flight to quality in German market

The global credit crunch will have an impact on the most sought-after type of assets in Germany, says Eric Adler, managing director of European acquisitions at Tishman & Speyer in an interview in the upcoming edition of PropertyEU. 'In the last period, people didn't care anymore about what they were buying, but the current market situation will lead to a re-pricing of real estate, and a greater difference in value between quality assets and secondary property. Investors will have to account more for what they are investing in.'

While the current credit crisis will squeeze out some of the highly-leveraged players, other investors will 'embark on a flight to quality' in search of greater value, Adler adds. 'Although the market may get a bit heady now, it will stabilise after a bit, and will remain a big opportunity for investors.'

Tishman Speyer is one of the biggest foreign investors in Germany. Last year, it completed 14 acquisitions in the country, including the purchase of a EUR 860 mln office portfolio from Difa, now Union Investment Real Estate. More recently, it sold off eight buildings in the heart of Dusseldorf's banking district and in Frankfurt to Spain’s Metrovacesa for EUR 340 mln.

Market sources say that the seven Düsseldorf buildings were sold for EUR 280 mln. Adler said the proceeds of the sale will be reinvested in the German market, adding that Germany will continue offering value over the next five years. 'We are a big investor in Germany and we will continue making big investments in the country. Germany is a simple story. It is the biggest country in Europe and has the biggest economy on the continent. And, in contrast to other European countries, it didn’t take off years ago when others did.'