Investing in German Real Estate
Our Investment Philosophy
Our goal is to provide investors with a secure, low-risk, high-yield return, driven by steady cash flows and low capital volatility.
Within the current economic environment, we believe that targeted German real estate investments are an excellent opportunity to deliver such an outcome, by locking in the yield differential between local borrowing costs and rental yields.
At the same time, our investors can rest assured in the knowledge that their brick-and-mortar assets are underpinned by Europe’s strongest economy, with the lowest house price volatility of any developed economy, and a robust labour market providing strong tenant credit.
German Macroeconomic Fundamentals
- There is a fundamental mismatch between the low borrowing rates and strong economic environment
- Unemployment rates, manufacturing indices and consumer confidence are all at post-unification highs
- Meanwhile, domestic bank credit can be fixed for 5-7 years at 2% or lower
- In addition, the increasing appetite for lending by regional banks is driving credit expansion and asset values
German Residential Real Estate Market
- German house prices are the most stable of all developed economies
- The past 5 years has seen steadily increasing demand from both private and institutional capital
- Low and rising home ownership rates provide long-term upward pressure on values
- We are able to source stable, income-producing assets in second-tier cities with gross initial yields ~8%
- Outside the major cities, income growth has outpaced rental growth, providing reversionary upside
- Tenants will typically stay as long as 10-12 years, with rental escalation at inflation+