Preqin’s Olivia Harmsworth takes a detailed look at the private real estate market in Germany, including the latest data for closed funds and funds in market, as well as information on investors based in Germany.
Preqin’s Real Estate Online service contains detailed information on over 4,400 private real estate funds, including 111 which focus on investments in Germany. Extensive profiles feature detailed information on fundraising and closes held, known investors, performance data and direct contact information for key decision makers. As shown in Fig 1, fundraising for Germany-focused private real estate funds has remained at relatively low levels, declining since the peak of EUR1.9bn raised by 10 funds reaching a final close in 2011 to just five funds closing on an aggregate EUR0.7bn in 2014. Interestingly however, 2015 so far has already seen two Germany-focused funds reach a final close, including German Senior Debt Fund, which raised EUR500m, making it the largest private real estate fund focusing on the country to close since 2012.
In terms of strategy, funds focusing on core investments have accounted for the largest number of Germany-focused funds closed from 2012 to 2014, with nine such funds raising a total of EUR1bn. Six opportunistic funds closed in this time period, although they raised a total of just EUR500m, with two value added funds raising EUR800m. In terms of property focus, although funds making diversified property investments account for the largest proportion of funds closed from 2012 to 2014 (40%), funds investing in residential property account for a relatively significant 26%, with retail investments representing a further 14% of funds closed. Despite the annual number of Germany-focused funds closed declining for the last few years, the fundraising market is increasingly competitive, with the number of funds in market focusing on investments in the country increasing from seven in January 2010 to 12 in January 2015, with the aggregate target capital increasing from EUR1.3bn to EUR2.9bn over this time period (Fig 2).
Preqin’s Real Estate Online also contains detailed profiles for over 4,700 institutional real estate investors, including 124 based in Germany. Profiles include information on allocations, investment plans for the year ahead, funds previously invested in and contact information for key decision makers. Insurance companies and private sector pension funds account for half of investors based in Germany, at 26% and 24% respectively. Family offices and asset managers also make up a sizeable proportion of the investor universe, at 13% and 11% respectively. In terms of assets under management (AUM), the majority (52%) of Germany-based real estate investors possess less than EUR10bn. Thirty-five percent of institutions have between EUR10bn and EUR49.9bn in AUM, and just 9% have EUR100bn or more. When looking at investors in terms of their allocations to real estate (as a proportion of their AUM), Preqin data shows that the largest proportion of investors (33%) allocate between 5% and 9.9% to real estate. Core strategies are by far the most sought-after by Germany-based real estate investors, with 80% targeting the strategy, significantly more than the second most sought-after strategy, value added funds, with 53% of institutions seeking funds following this strategy. Preqin’s Real Estate Online contains details of 283 investors seeking to make new real estate investments in the next 12 months via the Fund Searches and Mandates tool. One such Germany-based institution is asset manager Feri Trust, which is looking to invest EUR100m across two private real estate funds in the next 12 months. The investor will seek additional exposure to non-core US real estate through these commitments.