Research - OCTOBER 7, 2013

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AEW Europe sees value in secondary German cities

by Reg Clodfelter

Germany remains a priority for real estate investors looking to invest capital in Europe, particularly due to improvement in the economy and near record pricing for core assets, according to new research by AEW Europe.

“The outlook is brightening for the German economy and, as concerns about the euro zone crisis dissipate, investors are prepared to move up the risk curve by looking at markets that they overlooked during the financial crisis,” comments Sam Martin, head of research at AEW Europe.

Germany’s secondary cities — defined as cities with populations of 250,000 to 600,000 people — have drawn a number of investors due to affordable rents and long leases on assets providing safe, long-term income protection. In contrast, Germany’s top-tier cities have offered low returns and little opportunity for further compression of net initial yields. 

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