ZBI Immobilien to invest €1b in German resi this year

German residential specialist ZBI Immobilien is gearing up to invest around €1b in Germany this year, Thomas Wirtz, member of the management board at ZBI Immobilien, told REFIRE this week.

‘Last year, we invested around €1b in Germany, of which more than 50% was in ‘B’ and ‘C’ cities,’ Wirtz said. ‘Some ‘A’ cities are overheating, so we have had to adjust our investment strategy. We expect to invest a similar amount again this year. We look for cities with growing demographics and a good economic environment, investing in residential stock in A, B and C cities across Germany.’

According to ZBI’s report published this month, ‘Investment potential in secondary housing markets ‘, secondary cities offer attractive investment opportunities. In the study, ZBI analyzed 24 cities, such as Karlsruhe, Regensburg and Rostock, across six federal states. Between January 2016 and summer last year, apartment prices rose by 3.9%, with rents increasing by 2.4% in the period.

‘Demand for housing is rising,’ said Wirtz. ‘The main message from our research is that you have to analyze each city individually.  ‘A’ cities typically generate an initial yield of 4.5% to 5% in our target investments. In ‘B’ and ‘C’ cities, yields tend to start at around 6%. However in cities such as Essen, in North Rhein Westphalia, we intend to buy properties at a multiple of 15, which equates to an initial yield of 6.5%,’ he added.

Vacancy rates have also decreased more than two-fold in many of the cities studied. For example, they stood at 1.7% in Baden-Württemberg in 2015, down from 4% in 2011. It is a similar story in Bavaria, where they stood at 1.5% in 2015, down from 3.7% in 2011, according to the study.

‘I think that vacancy rates across the board will come down this year, primarily because demand is strong and there’s not much being built,’ Wirtz said. ‘The market for buying residential portfolios is very competitive at the moment but we’ve been in the closed-end fund business for 15 years, which means we can also source some good off-market deals.’

(ssk)