Back to the Roots for power stores and residential properties - new old approaches are catching on

Since the outbreak of the financial crisis the world of the professional real estate market has changed. Insurance companies, pension funds and special funds that were described as boring and difficult candidates are sought for more than ever in times like these. Investors which nobody has scarcely heard of before and whose names sound more like boy groups from MTV have stirred up the market and driven up the prices.


It doesn't look much different on the side of the offeror. "If once ago it was the opportunistic yield bringers that were disguised as a bargain, today these are the properties that are less volatile and also less risky that are requested", says Ralph Schonder, Partner and investment consultant at NAI apollo and as executive also responsible for the strategic direction of the affiliated company NAI apollo living. "The new motto is: back to the roots - there are no more deals without counter value, the cleaning process is completed."

There is still capital that can be invested. In times like these where the German stock index was halved and renowned companies that were rated AAA a couple of months ago are now unable to pay, the investors look closely.


Investors currently invest in power stores and residential properties

Ralph Schonder: „Even though I was born long after the war, the investment preferences of the investors give people something to think about. The focus of use of the sought for properties is more and more tuned to the basic needs food and living."


After numerous conversations with investors Ralph Schonder can ascertain an increasing demand in power stores from food retailing. People always have to eat. New buildings are sought after most, loation, location, location provided - for this they are even willing to pay a little more or rather accept a lower yield. .

Continuous increase of rental price

Residential properties are also welcome. Here a complete breakdown is almost impossible. There were seldom as many residential special funds on the market as presently. As statistics show, the rental rate for apartments has increased continuously in the past years. The rent table shows an average increase in the cold rents of 4.72 % since 2004.

Ralph Schonder: „We are confident that there will be a considerable increase of inflation in the next years, due to the current financial and economic situation. Therefore investments in material assets such as concrete gold will increase. This will keep leading to insignificant price reductions in core-investments in top locations.“

Meticulous revision of offers

In order to know or define the tenant clientele right from the start and have a secure and respectable real estate due to guarantees and the new substance in the next years most investors concentrate on new buildings or project developments. Again they look closely. If a few months ago residential portfolios were assessed on screen, clustered and partially bought unseen nowadays floor plans, residential types, potential target groups and sustainability are reviewed meticulously.

According to Ralph Schonder the greatest property advantages are a presentable, immediately stable cash-flow, indexed lease contracts, a complete and transparent documentation of the property, a content tenant clientel and last but not least the location with a suitable infrastructure in one of the top 5 cities in Germany. Currently NAI apollo is mandated with the marketing of "Living Galvani" with 124 high-quality apartments in the Western City of Frankfurt. This has turned out to be positive for both sides, the consultants of the landlord and of the investors.


Ideal investment volume from investors: 30 to 60 million Euro

A transaction volume of approx. 150 million Euro could be registered in Frankfurt/Main during the first months of 2009. Ralph Schonder: "Conversations currently prove that in order to stay fungible the ideal investment volume from investors are 30 to 60 million Euro per individual transaction.“

Source NAI Apollo