Timo Tschammler, managing director of international investment at DTZ in London, is casting his net wide in search of real estate investment opportunities.
Timo Tschammler, managing director of international investment at DTZ in London, is casting his net wide in search of real estate investment opportunities.
Tschammler, 31, joined DTZ as a director in 2005, where he was responsible for cross-border transactions, with a focus on French and German property markets. More recently, he has acted as the liaison for DTZ America and Asia Pacific investment entities. Prior to joining DTZ, he worked for AtisReal in Frankfurt. He is a member of the Royal Institution of Chartered Surveyors and holds a Master of Science in real estate and real estate economics (EBS) from the University of Nottingham Trent.
Here, he talks to PropertyEU about fears of an impending global recession and where to find the best real estate opportunities in an increasingly unpredictable market.
PropertyEU: What sort of impact is ongoing turbulence in financial markets having on property markets?
Tschammler: Despite the unified stance from the US and European leaders in attempting to battle the effects of the global economic crisis, the positive reaction to the measures demonstrated by share price increases at the start of last week has now all but dried up. Share prices have now reverted back to their downward course, falling across the globe amid fears of an impending global recession.
Increased banking stability should enable investors to more easily obtain finance, a factor which is currently stalling the completion of new transactions. However, another blow comes as UK figures show that unemployment has increased at the fastest rate in 17 years, a trend that is likely to be reflected in other countries across the world. This is likely to have a significant effect on occupational markets.
PropertyEU: The deal volume across Europe so far this year is down significantly on last year. Clearly, cash-rich investors have an undeniable advantage at present. Which investors are leading the investment pack across Europe at the moment?
Tschammler: In the second quarter (2008), German investors were particularly active, accounting for around 20% of all cross-border deals in Europe. In fact, over 60% of all European purchases by German investors were cross border in the period, compared with around 20% in the same period last year. Together, Middle-Eastern and German investors purchased almost EUR2 bn worth of property in the UK in the second quarter of this year. Lancer Asset Management, backed by the Abu Dhabi royal family, purchased two former Thistle hotels in Knightsbridge for around EUR400 mln. KanAm Grund acquired the Paveletskaya office buildings in Moscow for EUR603 mln. Going forward, Sovereign Wealth Funds (SWFs) are expected to become one of the most significant investors global commercial property markets.
PropertyEU: Which European markets do you think offer the best investment opportunities at the moment?
Tschammler: In the City of London, falling capital values, combined with exchange rate movements reflecting a weakening pound against the euro, have created opportunities for foreign investors to buy property in the UK at low price levels. The Nordic countries have been some of Europe’s strongest performing economies in recent years and, as a group, look set to withstand the current global downturn better than their larger neighbours.
PropertyEU: The credit crunch looks set to be with us well into next year. What sort of impact do you expect this to have on European property markets?
Tschammler: In a more risk-averse, credit-constrained world, the relative premium on prime assets is likely to widen, with secondary assets particularly vulnerable to yield correction. We may also see some unwinding of the general convergence of yields across European markets which has taken place in recent years as investors focus more closely on potential risk-adjusted returns. This will make for a challenging investment environment over the rest of this year and well into 2009, with underlying occupier fundamentals - and effective asset management - being vital given the limited scope for capital growth. We will also see a continued flight to quality and increasing yield gap between prime and secondary assets.
The full question and answer session with Timo Tschammler appears in the November edition of PropertyEU Magazine.
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