DEGI Deutsche Gesellschaft für Immobilienfonds mbH set up its first real estate Spezialfonds for more than one investor on April 26, 2007. The new fund, DEGI Europe Retail, is aimed at institutional investors wishing to contribute at least 20 million Euro to the fund. Over the next three years the fund will invest roughly €1.5 billion mainly in shopping centres, specialist retail outlets and city centre retail properties throughout Europe. Approximately one half will be acquired in western Europe, the other half in countries of eastern and southern Europe and in Turkey, where still vast development of retail potential is due.
Kröpeliner Tor Center in Rostock, Germany,
the first property for the new fund.
Locations with development potential
"The trend towards indirect real estate investment is continuing unabated amongst institutional investors. We are attracting a great deal of interest and demand from pension schemes, provident funds, insurance companies and banks with our Spezialfonds for several investors," says DEGI Managing Director Thomas Linker. He regards the retail real estate segment as attractive not only on account of the possible returns, which are higher than those of office properties, but also due to the currently booming economies of most European countries. "We are also seeing radical changes in consumer behaviour in the new EU states, the applicant countries and their neighbouring states. The expansion efforts of the national and international trade groups are creating additional demand for good quality retail space."
Kröpeliner Tor Center in Rostock, Germany
DEGI has already purchased its first property for the fund at a price of €87.8 million. The Kröpeliner Tor Center (KTC) with a total rental space of 19,451 m² will open in September 2007. It is located in Rostock's high street and pedestrian precinct. Nearly all 36 retail units of the modern, high-grade shopping centre have already been let to well-known retail chains such as Saturn, ZARA, New Yorker, Plus and Douglas. Besides the 15,134 m² retail space, the property also has three office units, a gym and a food outlet area. The catchment area covers a population of roughly 465,500. In contrast to the trend seen in many eastern German regions, the population of Rostock and its hinterland is set to remain stable on the long run, and the local economy is predicted to grow. This will have a positive knock-on effect on purchasing power and consumption.