Listed German office provider DIC Asset is confident it will secure significant pre-letting for its new MainTor office development in Frankfurt, CEO Ulrich Holler told PropertyEU. 'Frankfurt has a 12-13% vacancy rate, but there is huge demand for top-quality prime space. We have just started construction on the MainTor and I am confident the project will come through.'

The first phase of the project was sold at end-June to Frankfurt-based private investor Carlo Giersch in a forward sale totalling some EUR 15 mln. The move will boost confidence in the project, Ulrich predicted. 'In 2009, BNP Paribas carried out a survey for us but there was no interest from potential tenants. Two years later we're receiving good feedback from both investors and tenants. More tenants are thinking about improving the quality of their space. Two years ago, they didn't discuss it at all.'

The Hamburg-based company plans to launch the second phase of the project involving an investment of between EUR100-130 mln in 2012, Holler said. 'For a developer it's better to sell later, but the buyer of the first phase was willing to pay more because he was keen to invest in super prime real estate. For the second phase it could be either a pre-let or a sale.'

Holler said he was not phased by plans by US developer Tishman Speyer to build a new speculative office tower in Frankfurt following the success of the OpernTurm. Rental prices for the MainTor project will be significantly lower than for the new Tishman project while spaces will be delivered in phases. Holler: 'It's easier to reach a pre-let for phases of 10,000 to 30,000 m2.'

In total, DIC is planning to build the project in a minimum of three to four phases and a maximum of five or six. The project will also include residential developments, Holler added. 'We have so many options...there's a lack of high-quality residential in Frankfurt.'

DIC Asset currently has access to some EUR140 mln in cash following a capital raise earlier this year. Holler said the company was in talks about potential acquisitions, but added that he was cautious about the future.

But although the recent stockmarket volatility was a source of concern, Holler expressed confidence in the German market. 'The German market is still strong. I can't see a change of sentiment although there is uncertainty about the impact on the real estate market. Overall I think we will see some good years with more rental growth. Development and investment will pick up in the next 12 to 15 months.'

DIC's MainTor project involves redesigning the area between Untermainkai und Weissfrauenstrasse along the bank of the Main Frankfurt's financial quarter to provide 108,000 m2 of office space, apartments and food outlets. The district is to be ready by 2015.

DIC is active throughout Germany and manages EUR 3.2 bn of real estate. The shareholders of the SDAX-listed company are investment companies, insurers, institutional investors and family offices.