Feature: INVESTING IN GERMANY
Changing course
High-tech clusters make Mannheim a good choice for lifescience businesses
Germany has long been famed for being one of Europe’s most predictable investment markets. But as 2022 revs up, this core territory may yet reserve some surprises. Isobel Lee reports.
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f 2021 will be remembered for the exit of Angela Merkel and a difficult winter marked by recession risks and pandemic problems in Germany, 2022 is likely to usher in more positive headlines. While, like its neighbours, German capital markets revealed the weaknesses of some retail and office segments in the last two years, other asset classes have proved in rude health. “We see opportunities for investors in forward deals, particularly in the areas of multi-family homes, nursing homes and senior living and in offices in prime locations,” Jan Linsin, head of research at CBRE Germany, says. “Opportunities are also offered by investments in the operational real estate sector and increasingly also in life-science real estate and infrastructure.”
Meanwhile, if the territory’s logistics successes reflect a secular trend sweeping the globe, Germany’s residential markets have arguably powered into a class of their own. The year 2021 closed with Vonovia and Deutsche Wohnen’s ‘will they, won’t they’ storyline concluding after Vonovia secured 88% of the share capital and voting rights in Deutsche Wohnen to create the largest housing group in Europe, with a total property value of almost €90bn. Vonovia’s CEO Rolf Buch says: “The merger with Deutsche Wohnen is opening up new opportunities for us. We will use our renewed strength to take on even greater responsibilities on the social front as well.” Yet even the asset classes which investors avoided last year are starting to represent interest-
ing pockets of value. The sale by Patrizia at the end of 2021 of a 50-property strong German grocery retail portfolio met with “unprecedented interest” before being purchased by Germany’s GPEP for a price understood to be around €325 mln, reflecting a record net initial yield of around 4%. “We remain fully convinced of the resilience of food anchored convenient retail in the country and will continue to be active in this property type,” says Mahdi Mokrane, head of investment strategy & research at Patrizia Germany’s potential has often resided in its regional powerhouses, and 2022 seems likely to shift up a gear. The city of Hamburg’s extensive port and river areas are set for further development, through the regeneration project HafenC-
ity, according to investor relations chief Christina Ruppert. “Together the three urban development areas by the rivers Elbe and Bille — HafenCity, Grasbrook and Billebogen — represent a transformation zone of over 300 hectares in size,” she says. “With homes for some 25,000 people and space for around 70,000 jobs it is a development opportunity whose character is second to none in Europe, if not beyond. The Science City urban development project simultaneously opens up further future perspectives for Hamburg as a city of knowledge and science.” While 2021 brought its challenges, on the whole, its crises also prompted positive action, Ruppert says. “HafenCity’s vision has changed as a result of the coronavirus pandemic to the extent that it now demands even higher
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