Iain Keys, manager of London & Capital's German real estate fund, claims the German property market is unique enough to warrant a fund of its own. In particular, he believes the German economy is set to outperform its neighbours with the positive benefits to its property market. "It's so attractive because its long-term prospects are much stronger than in other countries," Keys says.
The Hartz IV labour market reforms introduced a few years ago have helped to boost employment and property prices. Keys said,""All the fundamentals are sound and there is fantastic growth potential, greater than in other countries."
The fund is invested entirely in commercial real estate. According to Mr. Keys, the current credit squeeze has had more of an impact on Germany's office market than its retail market. The fund's portfolio will target retail properties such as supermarkets and retail parks. Distribution warehouses are also popular. The average lot size is €20m (£14m).
The fund will look to diversity in various regions of Germany helping to minimse risk. The German market is known to be fragemented where current agents tend to be specialise only in their particular region. Hamburg, for example, is a hub for advertising and media, while Frankfurt is a centre for financial services.
The Cayman listed fund was launched in March 2006. The aim is to achieve a annual return of 15% after fees.
Source: Ellen Kelleher, Financial Times
