* German investors looking at riskier property assets
* IVG looking for partner deals in Europe, U.S. cities
* Union, ECE do not see new Russia investments
By Daryl Loo
CANNES, France, March 8 Stiff competition for
prime commercial properties in Europe is pushing German
investors to look more at riskier sectors such as emerging
markets and poorer buildings to boost returns, senior property
"Right now it's a difficult situation because there is too
much liquidity in the world and in Germany looking for core
products, in combination with the relatively low interest rate
environment, so we have been looking at other opportunities that
we can add value to," IVG IVGG.DE CEO Gerhard Niesslein said.
The property group is exploring up to 17 cities in Europe
and the U.S. for investments through partnership deals, in which
it expects to take between 5 to 20 percent equity stakes, he
said on the sidelines of the MIPIM real estate trade fair.
"Let's take Lisbon -- nobody would go there today. But
Lisbon is not going to disappear from the map for the next 20
years and you're getting fascinating returns in the middle of
the city," Niesslein said on Monday.
He declined to say if IVG was planning to invest there.
"The problem is not with equity but finding the right core
product at an acceptable pricing. Are we being pushed towards
letting risk now more than in the past? Yes -- and we are doing
this worldwide," said Karl-Joseph Hermanns-Engel, managing
director at Hamburg-based Union Investment Real Estate.
Union's open-ended fund rival DekaBank [DSUGUD.UL] also told
Reuters last month it had rejigged its near 2 billion euro ($2.7
billion) investment strategy away from core cities such as
London and Paris, to focus strongly on prime assets in regional
UK, French and U.S. cities. [ID:nLDE71L0ZH]
NO TO RUSSIA
While German companies are indicating an interest in taking
a punt on some of the weaker European countries such as Portugal
and Spain, which continue to struggle with sovereign debt
issues, they say Russia is largely off their radar screens.
The Russian government has been trying to attract
international investors with potential initiatives, including a
fund that could co-invest about $10 billion with private equity
firms in the country, a source said on Sunday. [ID:nL3E7E704R]
"We need more time before thinking about investing in
Moscow. From a German open-ended fund point of view, even Moscow
is still not up to our institutional expectation in terms of
stability of the market," said Hermanns-Engel.
While property in Moscow may offer attractive yields and
longer leases, he noted that there were doubts about the
security of cash flow and property title rights in the market, a
potential headache for foreign investors.
"It's a pity because we think the retail side of Russian
property is interesting," said Karsten Hinrichs, chief financial
officer of German developer ECE, which also manages 132 malls
across Europe, including one in Moscow.
"But at the moment there is very limited amount of interest
for finding financing or equity partners for development in
Russia. And looking towards the next two years, I don't see very
heavy investments there," he said.
(Reporting by Daryl Loo; Editing by Karen Foster)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)