German RE best placed to deliver ‘above-trend’ growth(2)

Investors should look beyond ‘volatile’ short-term concerns in Europe and focus on longer-term issues such as economic growth, liquidity and risk-adjusted performance, according to a report by UK real estate fund manager, Invista. Germany, it said, was one of the most attractive locations.

The German real estate market is expected to deliver “above-trend” growth over the next five years despite fears the economy will be impacted by the credit crunch, according to a report by Invista Real Estate Investment Management, a listed UK fund manager.

Recent reports have revealed business confidence in Germany has slumped, however, in its European quarterly investment report, Invista said investors should look beyond the short-term volatility of the property market and concentrate on larger, longer-term issues of economic growth, liquidity and performance.

It concluded that Germany was “well positioned” to deliver above-trend growth over the next five years, benefiting from tax and labor market reforms, improvements to productivity and competitiveness, and the relaxation of immigration laws to alleviate skills shortages.

Germany, it said, along with Italy, Benelux and France, were the most attractive investment destinations when taking medium-term decisions into account, not least because they were less exposed to the “credit-intensive, housing-boom” seen in many other European countries, such as the UK, Spain and Ireland.

Highlighting some of Germany’s largest states, Nordrhein-Westfalen, Bayern, Baden-Württemberg and Hamburg/Bremen, the report said many boast good infrastructure while some of the country’s city-states are characterized by above average economic output per head.

“We believe property investors should look beyond volatile short-term data and take a medium-term view of key factors such as the economic growth outlook and property market liquidity, transparency and risk-adjusted performance. Our favored countries provide opportunities to access diversified investment performance across a wide range of cities, regions and sectors in an environment where returns can be enhanced through asset management,” the report said.

Various reports have all shown German business confidence to slip over the summer, with the ZEW Center for European Economic Research in Mannheim warning its July index of investor and analyst expectations fell to its lowest since it was first compiled in December 1991.