15:43 | 05.06.09
By Alex Flans
Prices for German real estate will not adjust to the same extent as UK property, according to a leading fund manager.
Speaking at the Investment Property Databank's European Property Investment Conference in Barcelona today, Neil Turner, the head of fund management for Schroder Property Investment Management, said: "Although the repricing in Germany has not been as quick, I don't expect it to be as big as in the UK or in other places in Europe."
While the UK has experienced a 26.3% drop in capital values since 2008, and France has had a fall of 6%, IPD says values in Germany have had a much smaller drop, falling by just 1.4%
However, Turner who is fund director of Schroders' Global Property Securities Fund, added that he was "very nervous" about the Frankfurt office market because of its reliance on the financial services sector.
Turner said: "Frankfurt is the market which gives me the most concern. I am pessimistic about the prospects for the occupational market going forward. Vacancy rates are still high and are only going one way. Unemployment is only going one way too."
"Cities with a diverse economic base such as Munich and Hamburg are much less exposed."
He added that Germany's retail sector will be "more resilient" than offices over the next 18 months although Turner expected there would be an increase in the level of retail defaults.