Henderson Global Investors' latest real estate fund closure, the second one in two days, has raised twice as much equity as yesterday's German logistics fund. The Austrian commercial property fund has attracted €180mn from investors in Germany and Austria.
In the current global conditions, property is attractive for institutional investors as a hedge against inflation, matches their long-term investment outlook and provides stable high returns.
Last year, institutional investors gained better total return from Austrian real estate than the previous year, despite the debt crisis in Europe. Investment Property Databank’s Austrian property index recorded an average return of 6.3%.
Henderson’s German logistics fund targets an annual return of 8.5%, while the latest fundraising success in Austria is expected to generate an annual return of 7%.
This compares favourably to the traditionally “safe haven” German 10 year Bunds, yielding below 1.5%, and even to the riskier high yield fixed income instruments, which usually offer around 3%-4% per annum.
The Austrian fund will invest in a diversified commercial property portfolio,focusing on core to core-plus retail properties across Austria, as well as office properties in Vienna.
The Österreich Fonds 2, managed by the joint venture between Warburg and Henderson, has already invested over a third of its holdings. Acquisitions include two retail warehouses and a shopping centre.
Another warehouse acquisition is on the cards by the end of the year, with an ultimate target of around 10-15 assets in the portfolio by the end of next year.
Clemens Rumpler, Henderson’s head of property investment Austria, said: “Risk averse institutional investors recognise that the Austrian real estate market is ideally suited for investors who want to diversify away from existing investments in Germany.
“Like Germany, the robust letting market – a result of the strong economy – demonstrates stability. But in addition, the proximity and close links with central Europe offer further growth drivers.”
Wundrak added the retail warehouse sector in Austria in particular “benefits from the improved quality of new and refurbished assets attracting new retailers, previously focused on shopping centres and high streets.”
“Pricing is attractive as only few international investors are active in Austria at all and many local investors and banks are hamstrung by exposure to risky investments dating from the boom years,” he said.