German real estate offers the best opportunities at the moment, Opalesque Frankfurt Roundtable

From Komfie Manalo, Opalesque Asia:

http://www.opalesque.com/642690/German_real_estate_offers_the_best_opportunities269.html

German residential real estate is something which most serious investors should consider at the moment according to Sy Schlueter, fund manager of the Copernicus Fund in the latest Opalesque Frankfurt Roundtable sponsored by Eurex which took place at the Deutsche Borse in Frankfurt in June.
Schlueter said, "I have been for 25 years in equities as analyst, strategist, investment manager, but I must say that German residential real estate is still my best idea. I am not too optimistic on equity markets and not optimistic at all on government bonds, not even the so-called safe haven government bonds. For long-term investors, real estate is an asset class one should consider in general, but we all know that many markets bubbled in the last ten or fifteen years. In fact, there are only few real estate markets that have not seen a bubble and in my view only two markets worldwide can be considered substantially undervalued, and these are the German and the Japanese residential real estate market. Finding such an opportunity at our doorsteps, it was obvious that we entered it."
But he warned the domestic real estate space in Germany might enter into some bubble territory in a few years time as was experienced by other countries. Still, he insists that the German residential real estate is the best idea for the time being.
He explained, "I personally expect that we are going to experience a real estate bubble in Germany, because our interest rates in Germany are generally too low for the economic environment, similar to what it was for example in Spain or other Southern European countries ten years ago. We also see it anecdotally in Berlin where not only the proverbial German dentist is buying residential real estate, but you see Greeks, Spaniards, Italians or Israelis. You do not see that many U.S. investors as they find some excitement in their own residential real estate market. But probably from everywhere else in the world there is solid interest, and institutions are about to come in."
In late June, billionaire investor Nicolas Berggruen warned that the German real estate industry, which greatly benefited from the European financial crisis, would suffer if the euro eventually breaks up.
Berggruen, a German-American whose assets include homes and other Berlin properties valued at about 300 million euros ($375 million), said "Germany has been a safe haven, but if the euro disintegrates, it will be in trouble," and told investors to take a "very cautious view."
Going back to German real estate opportunities, Schlueter told panellists of the Roundtable that Copernicus built a good team exploiting these "opportunities." He continued, "With interest rates where they are, this asset class is pretty much a no-brainer. Our last fund focused on Berlin residential buildings - Zinshaus or 'yieldhouses is the term we are using for it, which you can buy with a yield of 7.5% or 6.5%, maybe even less now. Since we started three years ago to solely invest in Berlin, I think the multiples have gone up by 20%, I would say. But it is still possible to buy century-old buildings of high quality in decent neighborhoods at around and below 15 times multiples, which is giving you a yield of 7.5%. If you can finance a great deal of this at say 2.5-3%, your yield is almost 5%. After fees the investor still gets a payout of 4-5% per year." You can access the Opalesque Frankfurt Roundtable here: