German market for new closed-end property funds remains in doldrums
A report issued this month by rating and research group Feri EuroRating shows clearly the extent to which the German closed-end real estate funds sector has nearly ground to a halt. In the second quarter only three funds aimed at private investors were launched, with a total of €57.8m in equity capital – after a first quarter which saw only a single fund (from the Leipzig-based Publity) offered to investors. The two quarters represent an all-time low for the sector.
At the end of Q2 in 2013, before the introduction of the new stricter KAGB regulations, 14 funds with equity capital of €422.1m were in the starting block with their BaFin licences, ready for distribution. Commenting on the development, Feri’s Christian Michel said, “Since the KAGB regulations came into force on July 22nd 2013, only four property Alternative Investment Funds as recognised by the KAGB have been licensed by BaFin.” However, he said the number was set to rise before the end of the year, with 24 funds altogether readying themselves for the market – albeit mostly in shipbuilding, aviation and private equity. It remains to be seen how quickly the market for property funds can recover.