changes to public sector leasing are helping to drive real estate
leasing in Germany despite the current global economic
downturn.
property leasing has historically not been as popular a product as
equipment finance, commercial real estate leasing in Germany is,
strangely, booming.
Despite this sector seeing a drop in 2007,
last year it grew by 3.3 percent despite the wider economic
climate.
This is partly explained by the handful of
big-ticket transactions which, according to Bundsverban Deutcher
Leasing (BDL), Germany’s leasing association, pushed new business
up to €5.2 billion. The leasing of production buildings, warehouses
and complete production complexes saw most growth, while there were
fewer leases of retail properties, business premises and office
buildings.
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The growth can be partly explained by the
fact that real estate leasing is a much smaller sector in Germany
than it is in Italy, and therefore has much more potential for
growth. Part of the reason for this is that equipment is regarded
in Germany as better suited to leasing than real estate. The BDL
said this is down to the fact that only several large players in
Germany do real estate leasing.
But new opportunities are opening up, not
least in the public sector. This is partly driven by the fact that
last year the State Court of Auditors of Baden-Württemberg held
that public sector buildings could be raised and financed through
real estate leasing for up to 30 percent less than they would cost
the public sector, than through other forms of finance.
Alongside this ruling, German local
authorities are also increasingly considering leasing when
determining a project’s best value for money. Lessees under German
law are also able to acquire a property at the end of lease terms.
The purchase price is based on the residual value of the asset.
“This means the public sector party
benefits fully from the opportunity for the property’s
appreciation, while the risk of depreciation is moot insofar as the
lessee is not obliged to buy,” says Karolina Müller, communications
manager of Commerz Real, a subsidiary of Commerzbank.
Commerz Real itself has seen public sector
opportunities abound in recent months. A specialist in
public-private partnership (PPP) transactions, as well as most what
it calls “complex investment projects”, it recently financed the
Elbphilharmonie, a new concert hall built on behalf of the City of
Hamburg.
Part of a €241 million PPP project, its
completion is scheduled for 2010. Its other projects include a
woman’s hospital and a transplantation centre, both at the Medical
University of Hanover, a university hospital at Leipzig in Saxony,
and the Technical Museum in Berlin.
The public sector, however, is not for
everyone, partly as demand is seen as more erratic than in the
private sector. Germany’s largest real estate lessor, Munich-based
KG Allgemeine Leasing (KGAL), specialises in leasing office
buildings in Germany and Austria. It has seen a slowdown in new
business as a result of the credit crunch, although it is broadly
holding ground thanks in part to its increased use of sale and
leaseback.
