Nordic investment group NREP is making its first foray into the German market with a €500m investment plan, and the opening of two offices simultaneously - in Frankfurt and Munich. The move follows the acquisition last year of lending business Flins Capital Markets from global investment and advisory firm M3 Capital Partners.
Over the next three years, the Copenhagen-headquartered NREP will roll out in Germany the same strategies it has been pursuing for years in the Nordic countries, focused on logistics and rental residential housing. It has partnered up in a long-term joint venture with Swiss real estate developer Artisa Group to deliver 5,000 co-living apartments by 2025, and has already bought two co-living assets - in Berlin and Essen - to develop 314 individual apartments. A further 670 units are in the pipeline in Frankfurt. The properties will all be operated under Artisa’s established co-living platform, CityPop, offering fully furnished apartments with attractive communal facilities on flexible lease terms.
According to Rune Kock, NREP's real estate CEO, “Germany has Europe’s strongest economy and presents clear trends of urbanization, which makes it particularly receptive to NREP’s expertise in improving the built environment of cities. We have capabilities to create more customer-oriented products and implement ESG initiatives more broadly, which has proved a successful approach when expanding into new Northern European territories.”
Kock is also keen to transfer some of the company's know-how acquired in Scandinavia to its expansion plans further south. "The low sustainability benchmarks and energy efficiency standards in Germany offer potential for sustainability initiatives that have already been developed by NREP in the Nordics," he said.
These include geothermal energy, upcycling of building materials, and also building with prefabricated wood modules. NREP says it has constructed the world's first building using 100% recycled concrete. The company also drilled the first deep geothermal well for a logistics property in Finland. This resulted in a 95% reduction in CO2 emissions compared with district heating. NREP also sees potential for sustainable heat supply for larger buildings in densely built-up areas.
"We are committed to making our entire real estate portfolio CO2-neutral by 2028," said Kock. By that, he means both the CO2 sequestered in the buildings and the greenhouse gas emissions during operations. "We are determined to accelerate the path to a truly climate-neutral sector." This, he says, will require innovation and sustained efforts "across our portfolio, including Germany."
Commenting on the joint venture partnership with NREP, Alain Artioli, President of Artisa Group, said: “The undersupplied housing sector in Germany is partly driven by having one of the highest shares of single households in Europe, which is expected to further increase to 44% by 2035. CityPop’s consumer-orientated concept is enhanced by a digital app, with significant emphasis placed on resident events and activities to create a strong sense of community, connectedness and social interaction. Each building offers vibrant living spaces alongside a comprehensive suite of on-demand services and facilities, with convenient access to public transportation.”
Jani Nokkanen, Real Estate CIO at NREP, added: “Almost 80% of inhabitants in larger German cities rent their homes, yet there remains a significant supply-demand imbalance for high quality accommodation in well-connected urban areas. We have identified where these pressures are most acutely felt and see an immediate opportunity to apply NREP’s proven perspectives on livability, sustainability, customer-centricity and urban design to the German market, innovatively packaged through City Pop’s co-living concept.”
Last year NREP expanded outside the Nordic region for the first time when it entered the Polish market, and then bought German real estate credit specialist Flins Capital Markets, with 28 employees. Overall NREP has assets under management of €18bn spread over seven million sqm.
