Record inflows of capital into German listed real estate
German real estate Spezialfonds saw inflows of €3.1bn in capital in the first half of this year, up 14% on the same period last year and the highest amount ever recorded over a six-month period, according to capital markets research group Barkow Consulting. The figures are extracted from statistics issued by the Bundesbank.
Germany’s listed property companies also had their best-ever half-year, collectively raising €3.3bn through rights issues and capital raising placements, a year-on-year increase of 59%. Leading the charge here were the big listed residential companies. A further record was set for the issue of convertible bonds, which reached a volume of €999m in the period.
The losers among the vehicles for indirect investment in real estate were the large mutual or open-ended funds for private individuals, which failed to reach last year’s levels of volume. Not surprisingly, given the flurry of activity in the summer of 2013 when new, stricter regulations were being introduced, this year’s volume so far of €1.4bn in inflows is less than half that of the corresponding period of last year – although the figures for the second quarter showed signs that inflows were stabilising around about the 2012 level.
“There are market rumours that institutions are again showing interest in GOEFs, but these funds will never have the same significance as before the crisis – and this is one of the reasons why Spezialfonds are doing so well,” CEO Peter Barkow commented.
He also highlighted in his report how the second quarter was “the best quarter in capital markets’ history” for inflows into listed real estate, at €1.8bn. The main impetus was demand coming from foreign institutional investors, he said, with German investors lagging. He added, “German institutions are very slowly but steadily rethinking their strategy mainly because of a lack of alternative investments – and because listed real estate can be invested in quickly."
The supply was fuelled mainly by private equity funds selling their holdings or from initial public offerings (IPOs) – such as the stock-market flotation of Deutsche Annington last year – predominantly in the residential market, said Barkow. He added that there was potential for new products in the commercial real estate sectors, as they were “heavily under-penetrated” in Germany and “market participants are hoping for growth”.