RFP Magazine

Hubert Spechtenhauser, Chief Executive Officer of CommerzReal and Hans-Joachim Kuhl, Board Member, talk to Ashford Pritchard about their approach to real estate investment in Asia as they unveil their latest property in Singapore.

The first thing that strikes you when talking to the senior management of Germany’s CommerzReal is that they do not fit the profile of the average real estate investors looking to gain exposure to Asia’s often turbulent markets. Instead, they speak with a calm tone and impart a message that seems in tune with today’s austere climate. “We seek a reasonable rate of return over a medium to long term time horizon; the rate of return that a German retail investor expects from such a vehicle,” explains Spechtenhauser, referring to the Hausinvest Global fund, one of the key components of the organisation’s €42 bil real estate portfolio.

When it comes to their forays into Asian real estate, Kuhl has no hesitation in admitting that Commerz Real “are not the first movers towards new markets or new trends. We are part of the second or even third wave, when there is transparency in the market and the supply-demand cycle is more secure.” This risk-averse approach may limit the types of properties and markets that can be added to their portfolio, but allows them to maintain a consistent global standard when it comes to asset quality.

Tentative steps
The group first seriously started considering Asia as a viable investment in 2005. “We try to take a long term broadly diverse approach, both in terms of geography and asset type, and also have a broad diversification of tenants,” explains Spechtenhauser. The topping out of the Grade A commercial office tower at 71 Robinson Road brings Commerz Banks total investment in the region to €2 bil.

While Kuhl describes their general attitude to the region as “keen and confident”, he does note that it was not an easy task for his team to find suitable vehicles for investment. “We are limited in Asia. China, in our view, is not a real place to be for core risk-adverse long term investors in commercial real estate.“ Thus, so far the Asia portfolio only comprises of properties in Japan, South Korea and now Singapore, with Australia and Hong Kong on the radar should the right opportunity present itself.

 

Quality and sustainability
In an age where innovation, freshness and being first-to-market are seen as vital for economic success, it is refreshing to hear an organisation boast of having an “old fashioned bricks and stone perspective”. One of the most intriguing aspects is the connection between this conservative investment approach and the emphasis on the quality of the asset − something which helps sustainability.

“We are quality driven,” says Spechtenhauser, adding that “there are many things in favour of having a green property. The multinational tenants have environmental credentials in their demand list - they want the property to be green.” Safeguarding their global relationship with multinational clients is a key goal, and coming from a nation that has embraced sustainability there is a cross-pollination of expertise as they take on properties in new regions. This is reflected in the requirements that properties be state-of-the-art, and managed and maintainted to to the highest standards. With conservative investors such as CommerzReal now seriously entering the region’s markets with a do-it right for the long term attitude, is seems like the Asian markets could be finally coming of age.