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:
