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Is Frankfurt or Berlin the next London? Asian investment into German real estate markets up 916% to US$1.27bn since 2011

Latest figures from JLL show extent of shifting investor focus from UK towards major German cities


 

​​​SINGAPORE, 21 May 2014 – Levels of Asian investment into Germany’s real estate markets have grown by an astonishing 916 percent since 2011 to reach US$1.27bn by year-end 2013. According to the latest data from JLL, over the past 3 years Asian capital sources into Germany has increased to include Chinese and Korean investors with the majority of investment focussed on the core cities of Berlin (27 percent), Frankfurt (23 percent), Munich (9 percent) as well as portfolio deals across a number of cities (39 percent).

The latest figures show that the size and stability of the German economy coupled with high quality assets are rapidly making it the European destination of choice, after London, for Asian investors, particularly those stabilized, core office investments.

Alistair Meadows, Head of JLL’s International Capital Group in Asia Pacific commented: “London was, and still is, the starting point in Europe for Asian investors. In 2010, Asian buyers represented less than 10 percent of the Central London commercial investment market, by the end of 2013 that was close to 30 percent. While we expect this London focus to continue, the European focus has diversified and we have seen a sustained increased interest in Germany’s gateway cities from investors who are either buying assets directly or, more and more, through separate account mandates and Joint Venture deals with local partners.

Mirroring the trend in London and across Europe, the bulk of Germany’s Asian investment is coming from Korea and China where a relaxation of government policy has enabled outbound investment and encouraged insurance groups, developers, and ultra-high net worth individuals (UHNWs) to diversify their real estate portfolios internationally.

Matthew Richards, Head of JLL’s International Capital Group in Europe said, “While the Chinese have certainly been actively looking at and in some cases investing in the German market, we are also seeing increased investor interest from Korean groups with the initial acquisition of the Sony Centre in Berlin by the country’s National Pension Service (NPS) setting a precedent for Korean investment into German real estate. Given the rise of Asian capital being invested globally, the Year of the Horse will also be the year we witness groups from the region investing significant amounts of capital into the German real estate market.”

Of the 70 deals made in 2013 by international investors into Germany, 37 were brokered by JLL, totalling close to €12b.

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