Colliers International: German open-ended funds and the Eastern European investment market (DE)
Friday 4 January 2013
As of the end of 2012, German Open-Ended Funds (GEOFs) hold assets worth around 83 billion globally. The report examines the current and potential future impact from the liquidation of GOEFs on the Eastern European investment market.
The key findings of the report:
Approximately 4.5 billion worth of assets in Eastern Europe are currently held by GOEFs.
The majority of these GOEF assets are located in Poland (55%), Czech Republic (28%) and Hungary (8%). By sector, it is evident that commercial offices are by far the most popular form of property asset, accounting for 68% of all assets, followed by retail which accounts for 22% of all assets.
The conflicting needs of retail and institutional investor groups, combined with declining market conditions in the aftermath of the financial crisis, have destabilised the GOEF structure. This is expected to result in the expected liquidation of 15 funds over the next five years.
Since 2010 there has been a limited volume of new GOEF acquisitions, as a total of 11 GOEFs which had previously been active in the Eastern European region have issued notice of their liquidation. These 11 funds had previously acquired a total of 39 assets, equating to 2.175 billion in investment volume around 50% of the total volume of GOEF fund acquisitions across Eastern Europe.
GOEF divestment will positively increase transaction activity in Poland and Czech Republic, where most of the assets are held.
Despite this GOEF liquidation and divestment being a very real issue it is not expected to result in a flood of transactions, as divestment is likely to be a gradual process.
Those GOEFs which remain active are likely to develop strong positions in the market, and will continue to be active buyers across the core markets of Eastern Europe. Evidence of this comes in the closing of three deals in Poland in Q4 2012, from Union, Deka and RREEF respectively, for a combined 600 million.
Growth prospects within the GOEF sector appear to be limited for the foreseeable future given the greater focus on Spezialfonds. GOEFs have seen their overall volume diminish from 85.1 billion to 83.1 billion over the same time period, globally.