The London-listed asset management company is offering investors exposure to Germany's residential property market.

The UK's Aberdeen Asset Management has secured €150 million ($170 million) of client commitments for the launch of the Aberdeen German Urbanisation Property Fund.

The fund, which Aberdeen aims to grow to €1.5 billion, will invest in both residential projects and mixed use developments to provide potentially higher yields than investing solely in the residential space. Mixed use developments are those that combine residential with retail – for example, a block that includes a supermarket or a medical centre as well as homes. The residential part offers low vacancy rates and low tenant turnover, while the retail part holds the attraction of long-term leases, said Aberdeen. 

A typical yield for convenience retail is around 6 per cent, the company said, while high quality German residential property offers an average gross yield of 4.5 per cent, which is a more stable, albeit lower, income stream compared to office and industrial assets. It highlighted that the country's level of residential development is lagging behind demand, indicating potential for further rental and capital growth in the coming years. 

“Low construction activity relative to population growth means there is a demand-supply imbalance, particularly in metropolitan areas across Germany...This new fund will aim to invest in this theme by acquiring and developing residential and mixed-use assets,” said Fabian Klingler, head of direct property at Aberdeen Asset Management.

Aberdeen manages nearly €5 billion of residential property assets, of which over €3 billion is located in Germany. Altogether, the company managed assets of £291 billion on behalf of institutional and private investors as of the end of 2015.