Can corporate supply keep pace with demand?
That metamorphosis is occurring at a number of levels. First, it is being underpinned by corporate and municipal entities looking to unlock value from property holdings peripheral to their core businesses or responsibilities.
E.On’s sale of its portfolio of 150,000 apartments to Terra Firma in 2005 has been the most conspicuous example, not least because at €7 billion it was the largest private equity transaction ever completed in Germany. But at a more micro level, bankers say plenty of other corporate portfolios are changing hands almost daily.
Second, bankers say that the transformation in the ownership structure of European real estate is resulting in large cross-sections of German property being acquired by international investors. According to figures from Jones Lang LaSalle, 2006 was a record year for commercial real estate investment in Europe, with continued buoyant demand leading to volumes amounting to €242 billion in 2006, a 39% increase on 2005.