Dienstag, 2. Januar 2007

Investors Bet on German Property Boom

Investment in German commercial property is at a record high, boosted by the flood of foreign investors who are betting that the recovery in Europe's largest economy will at last trigger rising demand for offices and shops.

The volume of German commercial property transactions more than doubled to € 47,45bn ($59.8bn) last year from 2005, according to figures by Jones Lang Lasalle, the property consultant and investor. Activity is at an all-time high and foreign investors account for 79 per cent of the deal volume.

"We have seen extreme inflows of money in the German property market, mostly from the US," said Wolfhard Leichnitz, chief executive of IVG Immobilien.

"The big question now is when we will see fundamentals catching up with expectations," said Christian Ulbrich, managing director at Jones Lang LaSalle in Frankfurt. Mr Ulbrich expects the combination of economic growth and lower supply of offices to drive rents up. JLL forecasts average rent in the big five cities to rise between 1.8 and 4.6 per cent a year until 2009.

The introduction of real estate investment trusts in Germany this year is expected to boost investor interest in property assets further. Mr Leichnitz said IVG was considering whether to turn the company into a Reit.


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