Germany bidding for Asian real estate investors

ONE of Germany’s largest real estate asset managers is making a bid to attract Asian investors into the real estate market of Germany’s regional cities . . .
German manufacturers of trusted brands, whether cars or sophisticated machinery and equipment, need little or no introduction to their products.
 Asian consumers know them well.
 But when it comes to real estate investment, Germany is off the radar - because Asians are not familiar with, or often even aware of the opportunities that exist there.
 The Asian predilection for luxury brands is second only to a partiality for real estate, and when it comes to investing in offshore real estate, London traditionally has been the city of choice.
 Stefan Kalmund, managing director of Accom, one of Germany’s largest real estate asset managers, says Asian investment in the UK obviously comes from familiarity with that country.
 Now launching Accom’s first real estate fund targetting Asian capital, Kalmund has made several trips to Asia, hoping to raise the awareness of institutional investors to opportunities outside the three German entry cities of Berlin, Munich and Frankfurt.
 These cities offer trophy assets, he says, but it is the regional cities that are the hidden champions of German real estate.

Some of these cities are home to the country’s best-known global brands.

 “What we are saying to Asian clients is:  Buy yourself a little piece of Germany - areas you really like and where the brands you know and appreciate come from,” he says.
Kalmund explains that wealth in Germany is spread across the country - it is not concentrated in the large cities.
 “The regional cities create jobs which give the people their purchasing power,” he says. “The national economy also benefits from investment in infrastructure by local governments.
 “From an investment perspective, these cities are far more interesting than the big cities.”
 Over the past 20 years, Accom has completed some 320 real estate transactions, valued at more than 5 billion euro. Its investment strategy has been to seek out properties which lend themselves to value-adding - to turn them into core assets.
 Kalmund expects the five-year Accom German Champion Real Estate Fund to have its first close by the end of this year, aiming to raise €200 million. It plans to deploy up to €1 billion in equity over a three-year investment period.
 Kalmund believes the time is right to launch a German real estate investment fund – a first for Accom – designed for Asian institutional investors. In doing so, Accom is taking the opportunity to put all of its asset acquisitions under a single umbrella.
 He says:  “The reason we are focussing on Asia is that it has a strong appreciation of German brands and of the economic, political and financial stability and strength of Germany.”
 Germany is not just a strong trading partner of countries in Asia, he adds. It has established strong bilateral ties with individual countries - 80 twin city arrangements with China, and 40 with Japan.
 Kalmund says Asian investors like liquidity when they invest in real estate, and, in this respect, the German market probably has the most liquid real estate market in Europe.
 The property market is stable, he says, and one reason for that stability is the long-term contracts that German tenants are used to. They sign up for a minimum of 10 years, with options for further extensions.
 Sophisticated Asian investors looking for diversification are already investing in Europe. In fact, says Kalmund, a number have approached Accom offering special mandates to source investment assets for them.
 Kalmund’s marketing team is focussing on Hong Kong, Singapore, Thailand, South Korea, Japan and mainland China. The people involved, he says, have had exposure working with investors in these markets.
 In general, he says, Asian investors are keen on the idea of investing in Germany, with some of the larger and more sophisticated investors already researching the German market or forming relationships with German companies.