"In an industry where everything is becoming increasingly specialised, it is simply not possible for a single surveyor to make an accurate valuation judgement of an office block in New York, a factory in Sydney and a family home in Frankfurt," Ingo-Hans Holz said. "It's like going to the dentist with a knee-problem."
Holz manages the first property fund for German corporate real estate -- the BEOS Corporate Real Estate Fund Germany I -- and is the director of BEOS, a German construction management association which has been developing property since 1997.
The fund, which started up earlier in September, has raised 200 million euros ($269.3 million) from institutional investors, an amount Holz plans to double. He sees half of the fund being held in equity.
About 10 major open-ended real estate funds in Germany closed at the peak of the global financial crisis two years ago, because they were afraid of investors pulling money out and being left with no liquidity. "These fund closures shook investor confidence, but it is important to remember the nature of our investor clientele and therefore the relative associated risk," Holz said.
Funds at KanAm Group, Aberdeen Immobilien and Morgan Stanley, which have been frozen for two years and are battling to retain investors when they reopen in October, chiefly attracted investors with short-term interests. The investor-base of the BEOS Corporate Real Estate fund however is made up mainly of savings banks with sufficient liquidity to stay on for the long-term, Holz said.
MID-CAP SECTOR
The fund, which is not yet measured against a benchmark index, has bought buildings in Berlin, Hamburg, Mainz, Karlsruhe, Frankfurt, Cologne and Stuttgart. Holz said he favoured properties in "B-locations", with high development potential but without top-end price tags. "We are particularly interested in properties in the so-called "Mittelstand segment" -- the middle class and mid-cap sector," Holz said, adding they can be used as offices, laboratories, or other facilities. According to Holz, this reduces the chance of the building remaining vacant for a sustained period of time.
"Looking at the wider economy, I believe that the tensions between Germany's thriving economy and the ailing economies of Greece, Ireland and Spain will remain, and naturally this will also impact the real estate sector," Holz said. "Nonetheless, I believe that Germany will continue to prosper compared to European neighbours and will not only be able to combat a sector double-dip but a double-dip in the wider economy."
By Josie Cox
