Bloomberg News

German Real Estate Is Top Pick in Europe for Investment Funds

January 25, 2012

Jan. 25 (Bloomberg) -- Germany and Scandinavia are the most favored investment locations in Europe for unlisted real-estate funds because money managers perceive them as more likely to weather the recession threatening the region, according to survey published today.

German retail properties were the top pick for a second year in an annual survey of 121 investors and money managers by the European Association for Investors in Non-Listed Real Estate Vehicles, or Inrev. The respondents own or manage 1.66 trillion euros ($2.16 trillion) of assets. Around 64 percent of them said German retail is their preferred location and industry.

“Investors continue to show an aversion to risk, heading for the seemingly safer havens of northern Europe,” said Casper Hesp, the Amsterdam-based group’s director of research and market information. “We’re seeing a shift away from southern Europe.”

Germany’s economy, Europe’s largest, will probably grow 0.6 percent this year after a 3 percent expansion in 2011, the Bundesbank predicts. Consumer spending is bolstering growth, prompting real-estate investors to target large shopping centers that dominate their local area and provide owners with a more reliable return.

Property Deals

Two of continental Europe’s largest individual property deals last year involved malls in Germany. TIAA-CREF acquired the Perlach Einkaufs Passagen in a Munich suburb for more than 400 million euros, while Canada Pension Plan Investment Board paid 650 million euros for a 50 percent stake in the CentrO mall and leisure center in Oberhausen.

Sales of German retail properties totaled 7.69 billion euros last year, a 46 percent increase from a year earlier, according to data compiled by Jones Lang LaSalle Inc.

Shopping centers and stores in Scandinavia are the second most popular real estate investments in Europe, Inrev’s survey showed. Offices in the region were ranked third.

Last year’s largest deal in Scandinavia was the purchase of three shopping centers in Stockholm for about 4 billion kronor ($580 million) by Swedish insurer AMF Pensionsfoersaekring AB’s property unit.

French offices, which ranked second in last year’s survey, slid to sixth behind French retail properties in the review of preferred locations by property type, the survey showed.

The U.K. fell out of Europe’s top five investment locations. A monthly index compiled by Investment Property Databank Ltd. indicates that average property values are falling. Most respondents in the Inrev survey said they plan to reduce their holdings in Portugal, while Italy and Spain were also shunned.

--Editors: Jeff St.Onge, Andrew Blackman

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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