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Foreign investors are heading towards secondary cities in Germany in search of a ‘safe haven’, Timo Tschammler, head of DTZ in Germany, said during a panel discussion hosted by PropertyEU on Thursday.

In 2011, the five biggest German cities accounted for 47% of the EUR 23.5 bn invested in commercial property with a strong focus on core retail and office assets. But investors are also looking further afield, Tschammler said. ‘Core continues to be first choice but the definition of core is widening to prime offices in mid-sized cities.’

Foreign investors traditionally focus on Berlin, Dusseldorf, Frankfurt, Hamburg, Munich and to a lesser extent Cologne and Stuttgart. But Tschammler claims there are also good opportunities to acquire office developments in cities like Hannover, Mannheim and Erlangen where the office market is established and relatively stable.

Thomas Beyerle, of IVG, confirmed that office assets in secondary German cities outside the big seven were much more on the radar of international investors. In 2011, IVG sold a sizeable number of assets in 2nd and 3rd tier cities, he said. ‘Until late spring 80% of the buyers were local investors. This changed after the summer when 80% of the buyers were foreign. It is just a simple operational question: the yield should reflect the exit possibility to leave the market in good or bad times,’ he said.

Tschammler and Beyerle were two of the panellists at PropertyEU’s inaugural Investment Briefing in Amsterdam on Thursday. The other members were Christoph Schumacher of Union Investment; Markus Beran of Berlin Hyp; Jan-Baldem Mennicken of Pramerica and Tim Andreas Lasys, managing director of Catella Germany.