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Money Investment
"For every dollar of real estate there are seven investment dollars waiting."
The question of how Germany's troubled open-ended and closed-ended funds would fare this year was at the centre of this year's gathering of the Association of German Real Estate Valuers BIIS, against a global background where 10% more institutional money is expected to flow into real estate worldwide.
The 200 assembled delegates heard from Hela Hinrichs, researcher at Jones Lang LaSalle, how more than €600bn additional funds would be invested in real estate this year, and how "for every dollar of real estate there are seven investment dollars waiting". However, she warned, nothing can be taken for granted. In particular, Germany is grappling with the whole issue of how much office space is really required for all these employees. Long with the most generous amount of space per employee of any market, Germany is undergoing steady change.
Daniel Tochtermann, head of real estate investment at Credit Suisse, advised delegates (somewhat tongue-in-cheek?) to invest in new buildings if they could, since there is so little bank finance available for project developments. Preferably assets between core and value-added, he said enigmatically, "If you have a competitive building in a competitive location, then you can certainly accept a two-to-three year lease contract, as long as its's not rented out too expensively."
Jörg Kramer, chief economist at Commerzbank, painted an economic picture for Europe with the inflation rate in the Eurozone likely to remain at 1% for the next 12-24 months. However, he sees trouble in Belgium, the Netherlands, France and Finland due to too high wage levels, too much credit, and looming price bubbles in housing – with prices now at least falling in the Netherlands, but with the others soon to follow, he forecast.
