Qatar, Gulf investors fixing sights on German real estate

A measure of how far the German real estate market has developed as a magnet for international capital flows is the extent to which the world’s all powerful sovereign wealth funds now look to include prime German assets among their holdings.  Among the wealth funds increasing their commitment is Qatar, whose ruling class has also been active in several high-profile German transactions recently.

The €200bn Qatar Investment Authority (QIA) has been one of the more aggressive Middle Eastern buying groups in recent years, buying strategic stakes in key German industrial enterprises, including car makers Porsche and Volkswagen and construction group Hochtief.  At a recent conference on Qatar in Germany, the QIA board member Hussain Al Abdulla touched on the fund’s strategy for German investment:  “Here in Germany our strategy is the need to focus on companies that not only sell in Europe, but also sell to emerging markets. We’re also increasingly looking at real estate.”

The attraction of German real estate, he suggested, lay in the fact that prices were still below those achieved in the aftermath of the post-reunification bubble in 1993. His fund has already invested billions in high-end European real estate in Europe, particularly London, where its assets include the Shard tower, among others.

Meanwhile, Qatari investor group Al Faisal Holding, itself with close ties to the ruling Al Thani family,  recently concluded a deal with Frankfurt-based SEB Asset Management to buy two prominent properties in Berlin from SEB’s liquidating ImmoInvest Fund. The five-star Grand Hyatt hotel on Potsdamer Platz in Berlin, part of SEB’s 19-building ensemble around the famous square, was sold to the Qatari group, along with SEB’s Maritim Hotel in Berlin’s Diplomatic Quarter, also from the ImmoInvest liquidation.

The Grand Hyatt was designed by Spanish architect José Rafael Moneo and offers 342 bedrooms. The 505-room Maritim Hotel, located in the Diplomatic Quarter of Berlin’s Tiergarten district, was last valued at over €186m.

SEB is in the process of winding up the €6bn ImmoInvest fund and repaying proceeds to investors. Over the past three years it has signed 35 sales agreements and is contiunuing to look for buyers for all its remaining assets. Last year it repaid €1.3bn, or more than 20% of its assets, in cash to its investors, with a further tranche payable this summer.

Deutsche Bank real estate subsidiary RREEF is also in negotiations with Qatari investors to sell its 70% stake in French quality retailer Printemps, valued at about €1.6bn. Minority shareholder the Borletti Group with the remaining 30%, is also thought to be selling its share to the Qataris, who plan a major investment program and the opening of new Printemps stores in Paris, Marseille and Nice.