An assessment of property investment vehicles with particular reference to German funds
| DOI | https://doi.org/10.1108/14635789910294868 |
| Pages | 430-444 |
| Date | 01 December 1999 |
| Published date | 01 December 1999 |
| Author | Jim Berry,Stanley McGreal,Karen Sieracki,Ramon Sotelo |
| Subject Matter | Property management & built environment |
JPIF
17,5
430
Journal of Property Investment &
Finance, Vol. 17 No. 5, 1999,
pp. 430-443. #MCB University
Press, 1463-578X
Received July 1998
Revised April 1999
ACADEMIC PAPERS
An assessment of property
investment vehicles with
particular reference to
German funds
Jim Berry, Stanley McGreal
University of Ulster, Co. Antrim, Northern Ireland, UK
Karen Sieracki
KASPAR Associates, UK, and
Ramon Sotelo
Flachenmarkt, Germany
Keywords Property investment, REIT, Germany, Funding
Abstract Property investment vehicles are reviewed from a literature perspective drawing upon
the experience of real estate investment trusts in the USA and contrasting this with European
examples. The primary focus of the paper is upon German funds, using survey evidence to
evaluate their structural characteristics. The paper forwards from a theoretical perspective an
assessment framework indicating how different types of fund can be matched to product
opportunities on the basis of risk, appreciation potential, nature of contract, location and use.
1. Introduction
The objective of property investment is to obtain sufficient performance relative
to the risk of the asset. Performance is normally measured in terms of income
received or capital appreciation while risk encompasses issues such as the
security of the investment and liquidity. The downswing of real estate markets
in the early 1990s and the subsequent withdrawal of equity capital created a
major void for property as an asset class. As the effects of low inflation and low
trading volumes became increasingly apparent the property profession realised
that it must take steps to re-define property as an investment medium. The
search for increased liquidity through new investment vehicles has been to the
forefront and is recognised as vital in placing property on a par with other asset
classes. Given the illiquidity, indivisibility and lack of flexibility associated with
direct property investment, there has been a concerted attempt in recent years
towards the conversion of major single property assets into tradeable securities.
Indeed, new forms of indirect ownership based on real estate investment trusts
(REITs) havetransformed the US commercialproperty industry assets.
In section two of this paper the development of property investment vehicles is
discussed contrasting the growth of REITs in the USA with much lower profile
vehicles in the UK. Section three is based on the results of a survey of German funds
with an emphasis towards open-ended funds, given their greater comparability
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