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JLL: Asian investment in German RE up to $127bn

Commitments from Asian institutions and high net-worth individuals into the European country have increased 916 percent since 2011.

Asian investment into German real estate ballooned to an aggregate total of $127 billion at the end of 2013, skyrocketing 916 percent since 2011, according to research by global property services firm Jones Lang LaSalle.

London remains the first port of call for Asian investors coming to Europe, and is expected to remain so, according to Alistair Meadows, Asia Pacific head of JLL’s international capital group. However, “the size and stability of the German economy coupled with high quality assets are rapidly making it the European destination of choice after London,” particularly for core strategies.

One of the unique aspects of the German property market is that it is not dominated by one city, like London in the UK or Paris in France. Indeed, Asian investment is fairly evenly spread between several major cities, with Berlin taking up 27 percent of Asia-Pacific investment capital, Frankfurt 23 percent, and Munich 9 percent. Portfolio deals across a number of cities also make up 39 percent of Asian investment.

“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,” Meadows said.

The emphasis on joint ventures is characteristic of primarily Asian investors, as many of them desire more control over their real estate investments, added David Green-Morgan, JLL’s global capital markets research director for Asia. The majority of Asian capital going into Germany over the past three years has come from Korea and China, as recent government policy relaxations have made it easier for both institutions and high net-worth investors to diversify into international real estate.

Meadows also added that given the deal flow and investors interest JLL is seeing, Asian investment in Germany should only continue to grow. “I firmly believe there is a shift going on, and this is not cyclical,” he said. He added that Asian investors will probably follow the same pattern in Germany as they did in London, where they grew from less than 10 percent of the Central London commercial investment market in 2010 to close to 30 percent by the end of 2013.