GERMANY - Germany has overtaken France and the UK as the primary mature European target market for overseas and domestic real estate investors, according to research.
A study by Union Investment of more than 160 property companies and institutional investors in Germany, the UK and France found 71% of foreign investors cited Germany property as a target over the next year, up from 65% last year. This figure contrasts with 50% of investors who saw the UK as a target, compared with 62% last year.
Among domestic German real estate investors, 63% were more optimistic than at the same point last year, with 44% saying they intend to increase their direct or indirect property investment.
In contrast, only a third of UK investors expected to increase their property allocation, compared with 56% last year.
Union Investment attributed German optimism to the robust recovery of the property market sustained by a wider economic upturn. Almost two-thirds of German investors expressed business optimism for 2008.
More than half of those surveyed said they were looking to higher returns over safety, with 80% saying they took investment decisions based on likely increases in value rather than long-term returns. For the pollsters, this indicated an outward shift towards returns-seeking previously associated with UK investors.
However, the firm also identified a growing risk-awareness among European property investors, as 96% of UK investors and 93% of German investors claimed they were increasingly aware of risks included debt financing, legal risk and (especially in the UK) rent default. In France, the figure of those who said they were risk-conscious hovered just above 60%, up from 52% last year.