Germany Becoming a Hot Spot for Real Estate Investors
Wednesday, February 15 2006 @ 07:34 PM UTC
Contributed by: jron
Francis Greenburger, New York real-estate investor and literary agent has been associated Germany mainly with the Frankfurt Book Fair, he is attending it for the past 34 years.
Greenburger sees that Germany has potential to be one of the world's best real-estate bargain, he is now exerting time and effort to invest there. He also owns property in 26 U.S. states and parts of Canada.
He has spent $1.7 million to buy a 23-unit apartment building on the border of Berlin's Prenzlauer Berg district and a retail building a five-minute walk from Frankfurt's main shopping strip, over the past several weeks. He said that over the next 2 years, he says that he wants to invest "100 million Euro (about $120 million), through his company, Time Equities, in German residential and commercial property."
Greenburger also said "It's one of the top opportunistic markets," also adds "I look at Germany as a market that is hopefully at the bottom of the cycle."
Investors are flooding the country to buy suburban malls, thousands of apartments and block upon block of office buildings and towers. Investors from across the world have descended on Europe's largest economy looking for deals.
A report has that "The trend got rolling in the spring of 2004, with deals such as the Berlin government's sale of 4 percent of its housing stock to a group of investors including Cerberus Capital Management and Goldman Sachs Group Inc. It picked up speed in May 2005 when British private-equity firm Terra Firma Capital Partners Ltd. swallowed up Germany's largest residential real-estate company from E.On AG, including 140,000 apartments."
Morgan Stanley had bought eight office buildings in downtown Frankfurt, and by year's end the royal family of Dubai paid $101 million for a suburban shopping mall in Rostock with tenants including a Toys "R" Us and a McDonald's, by last year's end.
Compared to rising prices investors are paying in other markets, foreign investors say the prices they pay in Germany remain bargains.
Martin of Curzon Global said "For a long time, German real estate has been the most expensive real estate in Europe," he adds
"That's now flipped around." he has bought $1.2 billion of German retail properties in the past 18 months.
Martin explained that "German prices are falling as those in most other parts of the world have surged. Investors say they are seeing higher returns there than in other major markets. One measure for comparing relative returns across markets is "initial yield" -- the income a property generates, minus expenses. Buyers in London and New York City are accepting initial yields as low as 4 percent, while in German markets they can earn nearly 7 percent"