A hunt for the best objects
In 2005/06 IMMOFINANZ invested EUR 1.82 billion in the expansion of the property portfolio, and advanced to become the leader in Continental Europe.
The formula for success in reaching the targeted increase in value can be summarised in two terms: hunting and collecting. The first objective is to “hunt” for the right objects. Can the current rents in a building be held at this same level over the long-term – or can they be raised when vacated space is rented to new tenants – or could rents possibly decline when the present contracts expire? Will investors accept lower yields and higher purchase prices in exchange for comparable returns in this segment at some time in the future?
Is the overall level of rents protected over the long-term or could prices be raised – and if declining returns are expected in a particular segment, this will create a further opportunity for a corresponding increase in value – which, in turn, is one reason to decide in favour of purchasing a property. A general rule states that the potential for an increase in value is especially high at a good location, while a less attractive site will generate higher rents in relation to the purchase price, but the increase in value will be lower and an impairment charge may even be required over the long run.
The IMMOFINANZ investment policy focuses for the most part on objects at good locations. The company accepts slightly lower returns over the short-run, but this strategy gives the property portfolio an even higher long-term potential for an increase in value.
The formula for success in reaching the targeted increase in value can be summarised in two terms: hunting and collecting. The first objective is to “hunt” for the right objects. Can the current rents in a building be held at this same level over the long-term – or can they be raised when vacated space is rented to new tenants – or could rents possibly decline when the present contracts expire? Will investors accept lower yields and higher purchase prices in exchange for comparable returns in this segment at some time in the future?
Is the overall level of rents protected over the long-term or could prices be raised – and if declining returns are expected in a particular segment, this will create a further opportunity for a corresponding increase in value – which, in turn, is one reason to decide in favour of purchasing a property. A general rule states that the potential for an increase in value is especially high at a good location, while a less attractive site will generate higher rents in relation to the purchase price, but the increase in value will be lower and an impairment charge may even be required over the long run.
The IMMOFINANZ investment policy focuses for the most part on objects at good locations. The company accepts slightly lower returns over the short-run, but this strategy gives the property portfolio an even higher long-term potential for an increase in value.
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