London-based asset management firm Aberdeen Asset Management has launched its fifth German residential real estate vehicle for which it aims to raise €1.5 billion from investors.
The Aberdeen German Urbanisation Property Fund has already secured €150 million of commitments from pension funds, insurance and other institutional clients.
The firm said it would not be focusing on one particular strategy within the asset class, but, in a change from the fund series’ prior vehicles, Aberdeen said it would invest in both residential-only and mixed-use developments. Aberdeen is hoping this will provide potentially higher yields than previous solely residential funds.
The firm said residential development levels in Germany are not keeping with up with demand, that the country had a forecasted shortfall of 150,000 homes.
Fabian Klingler, head of direct property at Aberdeen, said: “The successful launch of the fund reflects the appeal of long-term, stable income streams to local institutional investors. Low construction activity relative to population growth means there is a demand-supply imbalance, particularly in metropolitan areas across Germany.”
A spokesman for Aberdeen said that the firm’s research suggested a typical gross yield for newly built residential property is about 4.5 percent, with a typical yield for convenience retail being around 6 percent. “Combining the two might provide a gross yield, for a mixed-use asset, of just over 5 percent,” the spokesman said.
“Mixed-use investments can often provide higher returns than residential on its own, without adding a significant amount of risk. The sectors can also complement each other. The residential offers low vacancy rates and low tenant turnover, while the retail holds the attraction of long-term leases.”
The firm would not disclose previous German residential funds’ capital raises or targets.
Aberdeen manages almost €5 billion of European real estate assets, of which more than €3 billion are in Germany.
3 billion are in Germany.