We invest in commercial real estate with positive cash flows from day one
MARKET ENVIRONMENT: COMMERCIAL REAL ESTATE
The supply of attractive commercial real estate in the central districts of major cities is in constant decline. According to market reports published by a range of commercial real estate brokers, more than 50 percent of the sector's transactions are limited to a small number of big cities. This is particularly striking as Germany's economy is primarily fuelled by SMEs, a clear majority of which are not based in A cities.
POSITIVE OUTLOOK FOR COMMERCIAL REAL ESTATE
Commercial real estate in locations outside the biggest cities is regarded as relatively stable. The amount of speculative development is limited. Vacancy rates are close to zero and rental prices are less volatile than elsewhere. Many of Germany's SMEs, the economy's so-called “hidden champions” are based in the country's B cities. This means that high initial yields of between 6 and 8 percent can be achieved. The Association of Real Estate Research (gif) recently revealed that just 103,700 square metres of commercial real estate is being developed in Germany's B cities in 2016. This is less than in 2014 (171,300 square metres). As a direct result, vacancy rates within the commercial real estate sector are forecast to continue their decline.