SWIP welcomes launch of G-REITs

Ian Hally, Investment Director, Real Estate Securities at Scottish Widows Investment Partnership (SWIP) comments on the launch in Germany of G-REITs, following approval today by the Bundesrat:

"The German REIT market will be the one to watch this year and will create a very interesting market for investors. The dynamics in Germany will be different to the UK and we expect the G-REIT market to grow significantly in size over the next few years.

"Germany is Europe's largest property market but has a very small quoted sector at present with relatively few liquid and tradable real estate companies. Unlike the UK, where conversion has been led by large listed real estate companies, we expect G-REITs to see significant growth from the corporate market.

"As many as 73% of German companies own property - significantly higher than the UK and the rest of Europe - and the REITs legislation paves the way for companies to either establish their own REITs or to sell their properties into a REIT. This creates the potential for Germany to become one of the most significant REIT markets.

"We identified last year that Germany was seeing the first shoots of economic growth coming through and we continue to see opportunities within the German residential, retail and office markets."

SWIP's European Real Estate fund is currently overweight in Germany reflecting SWIP's positive outlook for the market.