Almost one in five global investors at Thursday’s PERE Amsterdam Global Investors Forum said they would be turning away from the UK over the next two years by investing elsewhere.
During a panel session, titled ‘Germany: Europe’s new safe haven’ and moderated by Hubertus Baumer, co-head of institutional property solutions at Union Investment Institutional Property, delegates were polled on where they had been investing over the last three years and where they would be investing over the next two years.
The results did provide some surprising data, such as the respondents’ view of who might be the net winner of any retreat from investing in the UK.
Asked where they had predominantly invested between 2013 and 2016, 46 percent of respondents said the UK; 23 percent chose Germany; 3 percent picked France; 18 percent identified ‘other European’; and 10 percent voted ‘none of the above.’
However, when asked where they would be investing over the next two years, there were notable differences. This time around, the UK received 29 percent of the vote; Germany 22 percent; France 0 percent; ‘other European’ 38 percent; and ‘none of the above’ 11 percent.
The data showed a 20 percent increase in investor interest in ‘other European,’ which ranges from the Nordics to Southern Europe to Central and Eastern Europe. But it also demonstrates the impact of Brexit, with the UK’s percentage dropping by 17 percent – almost one fifth. Meanwhile, investor intentions toward Germany and France remained largely unchanged.
Sitting on Thursday afternoon’s panel were Bernd Beccheim, head of asset management and transactions for continental Europe at Aberdeen Asset Management Deutschland; Nico Tates, head of investment management at Prelios Deutschland; and Sascha Wilhelm, chief executive officer at Corestate Capital.
The panel agreed that in a straight battle between Germany and the UK, in a post-Brexit context, the UK’s mainland rival is faring better.
“We have seen a lot of Asian money entering Germany, for example, in Frankfurt with the Commerzbank Tower, where the buyer went in with a local partner,” said Beccheim, referring to Samsung’s €750 million purchase of Germany’s tallest building via Augsburg-based real estate firm Patrizia Immobilien. “It is rare for a foreign investor to go into the German market alone. It is very granular and needs a partner with high competence.”
Tates said that, from his experience this year, overseas investment in Germany has not increased as much as many expected, particularly given the UK’s difficulties in 2016.
Wilhelm said Corestate had been active in value-add and opportunistic German residential for the last five years, and from this he had seen evidence of domestic pension funds and insurance companies willing to take more risks.
“We have seen German institutional investors coming up the risk ladder, but not as far as taking developmental risk. They are looking for niche products in niche locations,” Wilhelm said. “For example, with micro-living – that is, student homes and business apartments – we have seen big players enter the German market. GIC, the Singaporean sovereign wealth fund, and GSA, the student housing specialists, became partners. Also, BVK [one of Germany’s largest pension funds’ and Corestate agreed on a mandate.”
“The trend is clear, domestic [German] institutional capital is looking for niche.”