Germany's top pick for realty funds in Europe

LONDON: Germany overtook the UK as the most-favoured investment location in Europe for unlisted real estate funds as the recovery of its economy, the continent’s largest, made offices and retail properties more attractive.

The UK fell to fourth place behind Germany, France and the Nordic region, according to an annual report by the European Association for Investors in Non-Listed Real Estate Vehicles. Inrev, as the association is known, surveyed investors and fund managers overseeing e981 billion ($1.3 trillion) of assets.

“This is a dramatic change in sentiment,” said Lonneke Loewik, the head of research at Amsterdam-based Inrev, in a statement on Tuesday. “Investors seem wary of higher property prices and a slower economic recovery in the UK, but attracted by growing confidence in the German and other European markets.”

Germany’s economy grew a record 3.6% last year as a surge in exports to Asia prompted companies to increase investment and hire more people, giving consumers more confidence to shop. Retail real estate in Germany was the most favoured type of property among investors, while office buildings were the third most popular, the survey showed.

The UK was the first-choice destination in Europe for investors in the past two years as the weaker pound lured overseas buyers, according to Inrev. Prices for the most desirable properties climbed to levels last seen in 2007.
Since July 2009, UK commercial real estate has appreciated by an average of 15%, Investment Property Databank estimates.

Last year’s 6.9% gain was the first increase in four years. London attracted the most investment globally in 2010. Property sales totalled £13.3 billion ($21 billion), 16% more than in 2009, Cushman & Wakefield estimated, citing Real Capital Analytics data. The city beat Tokyo and Paris.