Tag Archives: Berlin

Investors raise funds to buy more German rental homes

In an illustration of how institutional players could move into the UK market – once a decent level of rental stock is in play – two German companies have announced a second joint venture to buy residential stock.

The partnership also provides an example of how a financial institution can team up with a property management specialist, to enter the private rented sector in some scale. ZBI currently manages around 17,000 homes across Germany, with a total investment of around EUR1.5bn.

Last year, Deutsche Investment and management company ZBI created an investment fund which spent around EUR160m on housing in the Berlin area. Spurred on by the success of that fund, the pair are now starting a second fund, which will invest around EUR200m in and around Berlin.

The new fund expects to deliver investors an average 5.5% return, over an expected 10 year term. The pair will consider up to 25% new construction, and are prepared to look at forward funding new developments.

“We look forward ton continuing this successful model of partnership property,” siad Dr Bernd Ital of ZBI. “The cooperation between ZBI and Deutsche Investment guarantees a safe and efficient management of the fund for our institutional investors.”

At Deutsche Investment, the decision to undertake a second fund was off the back of a good pipeline of projects identified as the first fund was invested. “A balanced risk-return profile of all investment properties in the fund will provide a a low volatility,” said DI’s managing partner Florian Mundt.

Berlin shows London the way to build rental market

The residential rental market in Berlin is growing rapidly, with potential lessons for those looking to improve the situation in London and other UK cities.

Like London, Berlin has been seeing a growing population, which increased by almost 50,000 from June 2012 to June 2013. Like London, the delivery of new homes is failing to keep up with demand – and rental prices are rising as a result.

Unlike London, the market and city authorities in Berlin are reacting, and new supply is being delivered. New building starts in the city in 2013 equated to 0.7% of the total stock, a figure fully 40% ahead of London.

A new report identifies a pipeline of 13,900 new homes for rent currently under development across 191 construction projects. Further projects are expected to come into the development pipeline, spurred on by local government. City authorities calculated 137,000 more new homes will be needed by 2025, or around 10,000 a year.

Breaking down the participants in the Berlin market, the research by Howoge and BulwienGesa identifies 63% of the projects originated by the private sector, 29% by municipalities, and 7.5% by cooperatives.

Rental remains the predominant home type in Berlin, with 86% of the city’s 1.9 million homes currently rented.
One way the city authorities have directly helped promote more building is by adding extra staff to district offices, and paying a bonus for each new approved home. Urban development contracts are used to help share the burden of local infrastructure, and the benefit of increased land values after development. More herer on how Berlin authorities are planning the growth of their city.