Three-quarters of all companies listed in the German stock indices DAX, MDAX and SDAX have already come into contact with the topic of G-REITs during their strategic deliberations. These preliminary survey results are being published by the real estate investment manager DEGI Deutsche Gesellschaft für Immobilienfonds mbH in the February issue of its monthly research newsletter "Real Estate FOCUS".
27 percent of the companies concerned already have specific plans in regard to the new, tax-transparent Real Estate Investment Trusts under German law. Almost a tenth of the companies surveyed have in fact already completed the planning phase. Around a third replied that they were not intending to incorporate company properties in a REIT or an open-ended property fund.
Real estate: REITS an issue for German companies
A survey by DEGI Research reveals that German Real Estate Investment Trusts or G-REITs are a topical issue at 75 percent of all large German companies. 27 percent already have specific plans.
Turnovers set to rise in the long term
Thomas Beyerle, Head of Research & Strategy at DEGI, nonetheless anticipates that the G-REIT will inject some movement into the German property market: "The self-utilization rate of 73 percent at German business properties is very high on an international comparison. Rising pressure of competition, increasing flexibilization of production processes and the altered equity capital rules for lending entailed by Basel II will impel many companies to reduce their non-strategic property portfolio in the long term."
He expects that the introduction of REITs, by expanding the supply of company properties, will lead to rising turnover levels on the investment markets. However, these effects cannot be expected to show up immediately, due to lengthy planning processes at the companies involved. As yet, only a few have broken cover; most are waiting to see what their competitors will do.
DEGI Research sees limits to the mobilization of company properties in the buildings themselves. "Architecture and fixtures are often geared to the needs of the original users, so that for subsequent letting expensive construction work is frequently required, which may also reduce the amount of lettable space", explains Beyerle.
He expects that the introduction of REITs, by expanding the supply of company properties, will lead to rising turnover levels on the investment markets. However, these effects cannot be expected to show up immediately, due to lengthy planning processes at the companies involved. As yet, only a few have broken cover; most are waiting to see what their competitors will do.
DEGI Research sees limits to the mobilization of company properties in the buildings themselves. "Architecture and fixtures are often geared to the needs of the original users, so that for subsequent letting expensive construction work is frequently required, which may also reduce the amount of lettable space", explains Beyerle.
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