Cross-border investment into Germany on the rise with half of buyers now international, says JLL
- 50% of real estate deals in Germany involve cross-border capital, compared to 20% in 2014
- French investors represent the second largest source of cross-border capital after North America
- Growing activity among Asian investors led by Korean pension funds
Germany’s real estate market is increasingly international with new figures from JLL showing that 50% of buyers are now foreign compared to 20% in 2014.
Germany’s property market has traditionally been dominated by domestic investors but the ratio of international to national buyers of assets over €100 mln has shifted from 20:80 in 2014 to 50:50 in 2015*.
North American private equity funds are leading the way, accounting for 28% of deals so far in 2015. In second place is French capital, which is making more of an impact in Germany than ever, accounting for 17% of deals and investing €2.4 bln in German real estate in H1 2015, up from €1.7 bln for full-year 2014.
Asian investors bidding but not buying
International investors are not new to the German market; in 2014 foreign buyers accounted for 80% of bids for assets over €100 mln. Middle Eastern investors, too, are showing more interest in the market and Korean pension and insurance funds contributed €896 mln in 2014 and €417 mln in H1 2015. However, investment from other Asian capital sources, including the Chinese investors, remains largely speculative to date.
Alastair Meadows, Head of JLL’s International Capital Group, Asia Pacific, JLL, said:
“Korean investors are the most active in the region, but where other Asian capital sources are concerned we’re seeing more bidding than buying at the moment. Germany has become the second European destination of choice after London for Asian investors who are drawn in by attractive cash-on-cash returns driven by historically low financing costs.”
Matt Richards, Head of JLL’s International Capital Group, EMEA, added:
“As Europe’s largest economy, properties come at a premium, but in terms of capital values, Germany has yet to catch up with London or Paris and this is appealing to many investors looking to expand in Europe.”
*Based on JLL’s underbidder analysis only
Source: JLL
