GOEF Investment Activity Accelerating with €12 Billion Potential Spending Power
Liquidity levels across the German Open-ended Fund (GOEF) sector have been on the increase compared to the recent past, according to new analysis by CB Richard Ellis. The GOEF sector as a whole currently holds around €18 billion in cash or immediately liquid assets, which translates into up to €7.5 billion immediate spending power on real estate. This increases to as much as €12 billion over the next two years if inflows continue as expected.
Yet not all of the funds are in equally strong positions. Current liquidity levels are especially high for three fund managers in particular – Union Investment, DEKA (including WESTINVEST) and Commerz Real – who between them have over €6 billion immediate spending power.
Following the reopening of a number of funds during the summer months, the August BVI data reported sector net inflows at a positive €326 million. This is a very encouraging result after the net withdrawals of over €400 million in July, due to one-off redemptions from the newly reopened CS EUROREAL and KanAm grundinvest Fonds. Although some of the recently reopened funds continued to see net withdrawals in August, the scale was more limited. In fact, some of the funds that have only recently lifted suspensions on redemptions – such as SEB ImmoInvest and AXA Immoselect – are already seeing positive inflows again.
Improved sentiment is already being reflected in the GOEFs’ purchasing activity across the globe, and in Europe in particular. European investment by the GOEFs totalled €860 million in the first half of 2009, but has since picked-up with a further €790 million worth of investments in Q3 2009 alone . Perhaps not surprisingly, those funds not affected in October 2008 have been the most active acquirers in the market this year; however, the recently reopened funds, too, are already on the lookout for prospective acquisitions.
Iryna Pylypchuk, Senior Analyst in CB Richard Ellis’ EMEA Research & Consulting, commented: “This was certainly not a quiet summer for the GOEF industry. As in the recent past, funds continue to explore opportunities across a wide variety of markets and sectors, with more than half of Q3 2009 acquisitions in Europe outside the office sector. Retail and hotels, in particular, have featured prominently so far this year. The average lot size of recent investments by the GOEFs has also increased to around €100 million in the third quarter, compared to the average of only €65 million in the first six months of this year.
The substantial re-pricing of real estate that has taken place over the last two years makes many European markets an attractive opportunity for the GOEFs, who are typically targeting 5-6% annual returns. Many funds see this as an opportunity to re-enter the markets from which they have recently been priced-out. Paris can be singled out as one of the markets to attract particularly high levels of interest at the moment.”