Asians Move into German Real Estate with $1.27B in Investment

Asian investors seem to have discovered Germany’s real estate market last year as purchases of Germany property reached $1.27 billion in 2013.

While still a fraction of the sums put into the US or UK markets, the new investment record represents a 916 percent increase over the amount recorded just two years previously in 2011, according to recently released data from property consultancy JLL.

The firm recorded 70 Asian purchases of German real estate last year, with the bulk of the deals involving Chinese and Korean investors. Of these acquisitions, 27 percent were in Berlin, 23 percent in Frankfurt, and 9 percent in Munich as well as a number of portfolio deals stretched across multiple cities.

Alistair Meadows, Head of JLL’s International Capital Group in Asia Pacific commented: “London was, and still is, the starting point in Europe for Asian investors. In 2010, Asian buyers represented less than 10 percent of the Central London commercial investment market, by the end of 2013 that was close to 30 percent. While we expect this London focus to continue, the European focus has diversified and we have seen a sustained increased interest in Germany’s gateway cities from investors who are either buying assets directly or, more and more, through separate account mandates and Joint Venture deals with local partners.

Recent changes in government policy have reduced barriers to overseas real estate investments by Chinese companies and individuals, helping to spur a wave of asset purchases in Asia, Australia, North America and Europe.

Europe Seen as Undervalued

Many Chinese investors continue to see European real estate and other assets as undervalued, with mainland-based companies making a number of high profile acquisitions in the last year.

In London, Shanghai’s Greenland Group picked up two $900 million properties during the first week of January after rival Dalian Wanda had acquired the $1 billion One Nine Elms project along the south side of the Thames.

During March, Dalian Wanda, the property group controlled by Chinese billionaire Wang Jianlin, bought up the historic Edificio Espana building in Madrid for €260 million (US$358.6 million), and Shanghai-based Fosun is said to be part of a group acquiring a 620-hectare seaside near Athens for $1.26 billion.