Back in the 1980’s they used to dub GE chairman Jack Welch “Neutron Jack” for his penchant for eliminating employees while leaving the buildings intact. Germany is currently afflicted by the opposite problem. While unemployment falls to near record lows as the economy powers ahead – with one leading economic forecaster going so far as to even predict full employment as early as 2013 – it’s not jobs that are being eliminated, but buildings.

How can this be? Surely more jobs means more demand for office space, means higher rents, means investors prepared to pay higher prices to buy the buildings? Well, only up to a point, m’lud. Things aren’t really working out like that, much though we would like them to.

Let’s have a look at what’s happening. As we report in several articles in our REFIRE Intelligence Report throughout January, all the professional opinionators – from the consultancy groups such as KPMG and Ernst & Young, the specialist property advisory groups, and the economic think-tanks – are unanimous in their view that demand for German real estate will rise significantly this year, and with it, peak rents and prices in the prime business locations. Continue Reading

After months of weighing up appropriate reform legislation for Germany’s embattled open-ended real estate funds (GOEF) industry, it looked this week as if Germany’s ruling coalition had managed to find agreement on a new set of rules for the industry, which has been plagued with uncertainty and volatile investor behaviour since October 2008.

Meanwhile, the European Public Real Estate Association EPRA vowed to continue its campaign to “liberate the German market” from what it sees as an unhealthy domination of the sector by the open-ended funds at the expense of the stock-market listed sector.

The drive by Berlin to reform the GOEF sector has been gathering pace over the last two years, but has intensified since May of last year when original proposals emanating from Berlin led to a fresh wave of investor panic leading to fund withdrawals, and ultimately, the announcement of fund liquidation by three groups – Aberdeen Immobilien, Morgan Stanley and the KanAm Group. These funds are currently unwinding their positions and have announced a series of staggered payments over the next three years to their shareholders as assets are progressively sold off. This month saw shareholders in Aberdeen’s Degi Europa receive the first tranche of 20% of their fund’s (albeit shrunken, after heavy write-downs) total value. Continue Reading