Munich, October 9th 2007 – The German Open-Ended Funds (GOEFs) have made a strong return to the market this year, according to the EMEA research group of CB Richard Ellis Group, Inc. The GOEFs made €3.9 billion in cross-border purchases in Europe in the first half (H1) of 2007, three times more than the €1.3 billion of property purchased in the same period last year. With the current changes in Europe’s investment environment, this trend looks set to accelerate.

The return of the GOEFs to the market as active buyers has been driven partly by a return of investor confidence, which has seen the net cash inflow into the GOEFs reach €6.9 billion over the first eight months of 2007. This is in contrast to both bond and equity funds in Germany, which over the same period registered total net withdrawals of €11.2 billion and €15.8 billion, respectively.

GOEF buying activity in 2007 also reflects the large amounts of capital raised through the disposition of real estate assets in Germany over the past two years. It is likely that the funds will continue their portfolio restructuring in the short-term in pursuit of higher diversification across Europe, and increasingly around the globe.

The other notable trend is that whereas in the past the GOEFs have bought mainly in the biggest office markets, such as London, Paris and Stockholm, they are now buying more widely in places such as Italy and Central and Eastern Europe.

The current credit squeeze has also resulted in fundamental changes in the investment environment. Higher lending margins and lower Loan-to-Value ratios are changing the balance of players in favour of all-cash or low leverage buyers. The GOEFs, which typically borrow only a small proportion of the purchase price of assets, are likely to become more competitive and important in the European investment market.

Jonathan Hull, Executive Director of EMEA Investment, said: “We have already seen greater activity from the GOEFs, but this is only the start. We expect to see even more buying from them in the future as their low leverage means they are largely unaffected by more stringent lending standards. The better balance between debt and equity buyers is positive for the real estate market and will improve stability in the longer term.”

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