LONDON (Alliance News) - Aberdeen Asset Management PLC on Wednesday said it started a German Urbanisation Property Fund, securing EUR150 million of commitments from pension funds, insurance and other institutional clients, with the aim of growing the fund to EUR1.5 billion.
Investing in residential property is very attractive in Germany, Aberdeen said in an emailed statement. According to the asset manager, pensions funds and insurers are looking to property to provide them with income, given that the yield on 10-year Bunds is at only around 0.2%, whereas high quality German residential property offers an average gross yield of 4.5%.
Aberdeen said the fund will invest in both residential projects and mixed use developments, rather than taking the route of most other funds of its kind, which tend to invest solely in residential assets.
"The successful launch of the Aberdeen German Urbanisation Property Fund reflects the appeal of long-term, stable income streams to local institutional investors," Fabian Klingler, head of direct property at Aberdeen, said in a statement.
"Low construction activity relative to population growth means there is a demand-supply imbalance, particularly in metropolitan areas across Germany. Aberdeen is a leading investor in German residential property and this new fund will aim to invest in this theme by acquiring and developing residential and mixed-use assets," Klingler said.
Residential development levels are not keeping up with demand in Germany, according to Aberdeen, which said there could be potential for further rental and capital growth in the coming years.
A total of 245,300 homes were completed in 2014, Aberdeen said. The asset manager said forecasts suggest Germany needs up to 400,000 new homes each year.
Shares in Aberdeen were up 0.7% at 297.10 pence Wednesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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