During a session titled, “Global Hot Spots — How to Think about Hot Foreign Markets,” Wharton real estate professor Peter Linneman called on each panelist to describe the markets they find most intriguing. “How much is hype? How much is reality?” he asked.
Stuart Rothenberg, managing director at Goldman Sachs and head of its real estate principal investment area, said his company is most interested in Germany. The country has property available that generates strong yields, a recovering economy and efficient financing. In addition, German banks are liquidating large portfolios of non-performing loans, creating opportunities to buy residential property with yields of 4.75% to 5.25% and commercial property yielding just above 5%.
Rothenberg is optimistic about the German market because new supply has been limited by a sluggish economy, until now. Recently, multinational corporations have expressed interest in establishing German headquarters, which will drive down vacancy rates. Governments, he added, are taking steps to speed the pace of privatization. Goldman Sachs’ first German acquisition was a state-owned residential portfolio in Berlin. “The only bad news about Germany is you are competing against a lot of German funds,” he said.
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