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Cushman: German funds in €9bn sell-off

The liquidation of German open-ended funds will will drive new European investment opportunities, according to research from Cushman & Wakefield.

German open-ended funds will be selling €9 billion of European assets by 2017, said research released by global property services firm Cushman & Wakefield.

The report on the liquidation of German open-ended funds shows the selling process continues to provide investment opportunities in a wide range of countries with funds forced to off-load. The German funds have already sold €1.7 billion of commercial property assets in the first half of 2015 at an average discount of -4 percent over book value.

“We expect sales to grow in the rest of the year and in 2016 and German open-ended funds should continue to demonstrate some proactivity in their liquidation process in order to optimize their sales prices strategy,” commented Magali Marton, head of EMEA research at Cushman & Wakefield.

The liquidation of these German funds has already provided the market with €14 billion of sales since 2012. Yet, more is expected as 18 different funds enter in their liquidation phase. European assets will account for the overwhelming majority of disposals with the €9 billion of property sales mainly concentrated in Germany (31 percent), the Benelux (26 percent) and France (18 percent).

“Depending on the country, the pricing achieved to book value has ranged from a -26 percent discount in the Benelux to a premium of 47 percent for assets traded in the UK, with German assets sales reflecting a 6 percent discount,” added Marton.

The study said that across the board, discounts have been reduced as pricing in the European property markets have improved. For example, while assets typically traded at a 13 percent discount in 2014 dispositions, they have been trading at a 4 percent discount for disposals over the last six months.

“German open-ended funds have clearly benefitted from the current booming investment market in Europe and therefore have managed more successfully their asset sales in 2015 so far,” said Marton.