Rewind – Stephen Diggle Revisits German Real Estate Trade

Published on
February 24th, 2017
100 minutes

Rewind – Stephen Diggle Revisits German Real Estate Trade

Rewind ·
Featuring Stephen Diggle

Published on: February 24th, 2017 • Duration: 100 minutes

Rewind is the only place where the smartest investors explain how their thinking has changed in the context of past predictions, both right and wrong. In this edition, Stephen Diggle of Vulpes Investment Management - who turned $5 million into $5 billion in the space of six years - re-examines German Real Estate, prospects for pharmaceuticals and a potential break up of the euro. Filmed on December 28, 2016 in Singapore.


  • EK
    Emil K.
    27 March 2017 @ 17:04
    Another fine interview. I can't think of a country that will undergo more change than Germany in the next ten years. Demographic cliff (worse than Japan infamous episode in 90s), unemployment surge (exports fall), rising currency (Mediterranean countries leave euro), recapitalization of banks (likely implicitly funded by workers). Germany is very long globalization and very short the Mediterranean nations. I have a feeling it will be one of the least boring places on Earth in the next decade.
  • DP
    Daniel P.
    19 March 2017 @ 19:54
    Excellent interview guys, thank you both for your time. Totally engrossing and tons of information. Next time I am in Singapore beers are on me!
  • AD
    Anton D.
    19 March 2017 @ 16:14
    Hi Stephen, do factors of attraction you mentioned about NW Germany also apply to residential RE in Poland, Warsaw specifically? As a private investor I am very curious to know. Thanks.
  • SD
    Stephen D. | Contributor
    6 March 2017 @ 02:10
    Lukas D., our German Real Estate group, Stronghold, is based in Hamburg and we have most investments in North Western Germany. We do own property in other parts of Germany, including the east, but it's not our main focus. We quite often find people with a scant knowledge of Germany assume Berlin, being the capital, is the central focus, ours is not. What we look for is residential portfolios with high levels of occupancy and not massive cap' ex' demand that will produce high net yields. 8-10% gross 5-7% net, and if we can get 70% debt on 7 year fixed we are happy. Yes, prices are up, but so are rents (a bit), and bond markets are up too so debt is cheaper and the Euro is at a multi year low. Put all that together and we still see a very attractive yield play with great potential for capital gain.
  • PJ
    Peter J.
    4 March 2017 @ 22:39
    Well I really enjoyed the 99 minutes of Stephen and Grant 'floundering ' around, just can't get my head round that it's the best part of a year since I watched the previous interview. Looking forward to the next follow-up :)
  • KK
    Kevin K.
    4 March 2017 @ 20:07
    Great interview. Interesting to hear about the opportunities available to small traders/investors which did not exist pre 2008 and the effective endorsement of RTV from Stephen.
  • LD
    Lukas D.
    4 March 2017 @ 15:26
    @Steven, Do I understand correctly that your real estate fund is investing exclusively in eastern germany residential? What do you think about the other parts of germany? What are the min. yields (excluding debt) you would like to see in order to invest, since prices have risen strongly in the last years? How much debt are you typically using in your transactions and do you work together with german banks? Sorry for the many questions but this topic is highly interesting! Best Lukas
  • PB
    Pieter B.
    3 March 2017 @ 10:15
    Really good thorough interview! Thank you very much.
  • Js
    Johns s.
    28 February 2017 @ 06:16
    Great interview
  • SD
    Stephen D. | Contributor
    28 February 2017 @ 00:36
    Thanks David S. I really love what Real Vision is trying to do for thoughtful investors, and if people are prepared to give up 99 minutes to hear Grant and I flounder around trying to make sense of things, the least I can do is answer any follow up questions.
  • DS
    David S.
    27 February 2017 @ 21:13
    Mr. Diggle thank you for answering so many questions. It helps all of us and is a credit to your competence and caring. I would encourage other interviewees to follow your example if they feel comfortable doing so. DLS
  • LC
    Liliana C.
    27 February 2017 @ 20:39
    Such an insightful interview! Thanks Stephen and Grant. I love the in-depth articulation of Stephen's thoughts and also the pace. Simply brilliant! More updates please!
  • WB
    Wes B.
    27 February 2017 @ 20:35
    While it took me 3 days to finish the interview I left begging for more.
  • TJ
    Terry J.
    27 February 2017 @ 17:08
    Spot on with most of his investment insights and even more accurate in his political analysis. Fascinating and very informative interview.
  • SD
    Stephen D. | Contributor
    27 February 2017 @ 04:05
    Gary C. yes, Martin Diggle is my older brother and co-runs our Lifesciences Fund with me, (my younger brother also works with me and co-runs our agriculture). We are a family business. I can't say a lot right now about OXB as we are Restricted on the stock, as we often are having a person on the board. But you are right, OXB has issued a lot of stock over the past 6 years to stay alive. But I would strongly urge people to take a look at the fundamentals. They are strong, and as you also rightly observe, the mkt. cap' of OXB is tiny. Your focus on the manufacturing is also spot on.
  • GC
    Gary C.
    27 February 2017 @ 03:53
    Seems quite diluted. Martin Diggle listed as a company director...Family? The company partnerships and fabrication potential look like Big Pharma could add this Co as a division
  • GC
    Gary C.
    27 February 2017 @ 03:46
    Have listened to three interviews with SD each better than the previous. Very creative approach to multiple assets. Looking at capital structure of OXB noting 3 Billion shares for a tiny amt of capita
  • SD
    Stephen D. | Contributor
    27 February 2017 @ 00:34
    John C. I think we have to admit that we simply don't know what the impact of the 1m admitted into Germany will be. But if you are going to let in that many people the best country would be one with a very low rate of fecundity and a fiscal surplus. Germany needs either a baby boom, migrants or a declining population. As Landlords we don't want the latter! But it's clearly a gamble to let in 1m people from different cultures. As a businessman and a human being I hope it's a huge success but we don't see a huge economic impact yet.
  • KE
    Kenan E.
    26 February 2017 @ 15:14
    Hello Stephen D. I am not ashamed ot the hours worked in germany ;-) It's just that it's completely against my personal experience. Especially you said in the interview this would be with a 100% job. Sorry, but this has to be wrong. The OECD numbers ( are just the mean value of all types of work (part-time and full-time). You'll have a hard time to find a 100% job here in germany and work less than 1600 hours. Look at the weekly numbers of the OECD-data - there you can switch between full-time jobs and part-time jobs... Nonetheless the OECD data shows that there are numerous countries which have to work way longer...
  • TS
    Tim S.
    26 February 2017 @ 14:55
    Wonderful interview. Talk about an embarrassment of riches. @SteveR I get your point about not enough time, I listen at 1.5 speed and usually can follow along and then make notes where I want to relisten with maximum intensity. But, if I go to an "all you can eat buffet" -American after all- I don't complain that they have put out too much good food, I'm grateful for the broad selection even if I can't eat it all. :-)
  • JC
    John C.
    26 February 2017 @ 14:28
    This is one of my favorite interviews so thanks Steve & Grant. Being in RE in Eastern Europe it's very interesting to get a snapshot of Germany and the market there, as it's a sort of 'Holy Grail' of where one might end up in the space in terms of low rates, proper legal protections, low cap rates, strong tenants, modern buildings & technology etc. One question I have for Steve is re the migrants and is Germany entrepreneurial enough at this point to really bring these people into the fold eventually, or will they be a bit of a drag on it for some time until their children learn German and better integrate. I'd also note that from what I understand upwards of 70+% of these migrants are men from the ages of 20-35 and that's a bad dynamic in the West and in Germany especially in places where men already outnumber women. Thanks!
  • as
    andrew s.
    26 February 2017 @ 13:41
    First class TY
  • MF
    M F.
    26 February 2017 @ 12:44
    Regarding the comment about RV interviews being too long, I respectfully disagree. The whole point of RV is to have substantive discussions on topics which does take time, not short sound bites that mainstream media are so keen on. So while long interviews by definition take longer, they are almost always filled with multiple insights. Three suggestions are: 1) to focus less on other things that distract--e.g. broker calls/research, TV, and use that time for RV viewing; 2) use the 5 minute highlight feature, which is exceptionally useful in distilling key points briefly if time is limited; and 3)use the save to watch later feature, which allows you to reference when you get the time after addressing the key features first via the highlight feature. At least, that is how I get the most out of RV.
  • SD
    Stephen D. | Contributor
    26 February 2017 @ 06:44
    JW, you are absolutely right. Back in 2009 we started a long only Convertible bond fund and were buying a lot of stocks in Asia and the US. We got out of both trades in 2011-12 WAY TOO EARLY! but I'm a value investor and in the past four years we've been largely focused on Real assets ( German real estate and farms) and private equity. Public equities, except a few special; situations, are just way too expensive, but because the bond market is locked low by Central Banks I think shorting is too dangerous. That leaves me out of markets right now. But there is a lot to do in the PE space.
  • SD
    Stephen D. | Contributor
    26 February 2017 @ 06:44
    JW, you are absolutely right. Back in 2009 we started a long only Convertible bond fund and were buying a lot of stocks in Asia and the US. We got out of both trades in 2011-12 WAY TOO EARLY! but I'm a value investor and in the past four years we've been largely focused on Real assets ( German real estate and farms) and private equity. Public equities, except a few special; situations, are just way too expensive, but because the bond market is locked low by Central Banks I think shorting is too dangerous. That leaves me out of markets right now. But there is a lot to do in the PE space.
  • JW
    Jim W.
    26 February 2017 @ 02:54
    Every time I hear something from Stephen D, I end up feeling more enlightened. This rewind approach is great--so 99 minutes is fantastic, even if it means breaking up the listening into multiple parts. @Stephen, would it be accurate to say that the bulk of your activity has moved out of the public markets to find appropriate risk-reward? It seems natural in the world of financial repression to do that, but don't want to over-extrapolate based on this short interview with you and the Vulpes website.
  • SD
    Stephen D. | Contributor
    26 February 2017 @ 01:55
    Keenan E. The numbers I quote on working year aren't controversial. Wikipedia has The OECD numbers, for example, which say the German working year was 1371 hours in 2015, actually lower than the Netherlands and the lowest in the OECD. It's nothing to be ashamed of, bravo the German worker for being so productive and efficient.
  • KE
    Kenan E.
    25 February 2017 @ 14:27
    Hey Steve R. -- I don't know why you get so many down-votes for a comment that is SO TRUE. (Besides maybe it's a little bit off-topic but on the other hand there is no other possibility to post that ;-)
  • KE
    Kenan E.
    25 February 2017 @ 14:24
    This interview is very interesting. I would be interested in where Mr. Diggle has his numbers on the german hours worked from? I am german, I have to admit that I don't know those numbers. But from personal experience -- I know NO ONE who is working 1300 hours in a 100% job!?!?! Most people I know are working 1600-1800 hours per year in a 100% job... Currently I am working on an 80% job. I have to work 1280 hours a year.
  • SD
    Stephen D. | Contributor
    25 February 2017 @ 11:06
    Thanks for the note Klendathu C. We'll definitely check the company out. Though not on our areas of expertise.
  • MD
    Michael D.
    25 February 2017 @ 05:58
    Hi this is Mike Downer from Kit Trading. Pls feel free to email me direct at for more info. Thanks
  • TE
    Tim E.
    25 February 2017 @ 03:15
    Wasn't too long at all, for me anyway. Packed with great insights, and some actionable advice. I find I can understand Grant and Stephen perfectly at 1.25x speed on the playback, no problem. So, that's saves a little time. Also appreciate Stephen sharing so much of his time. Question: Where do I find out more about, or contact Kit Trading? Sounds like a brilliant concept. As someone who's just started a fledgling investment management business myself, I am both well aware of the barriers to entry for a small start-up, and in full agreement with how Stephen lays out the case for the manager having to have his own "skin in the game," and capital at risk. Maybe there's a "fit."
  • SD
    Stephen D. | Contributor
    25 February 2017 @ 01:08
    Robert M, I agree. Every country has to deal with an angry middle class. Giving them a cheap currency to make their labour cheaper is an easy win. The alternative might be tarrif protection, which will be much worse. Euro at 1.05 is great for European exporters.
  • RM
    Robert M.
    25 February 2017 @ 00:39
    9mins: Steve, the real growth rate differentials US-EZ tell me the US clearly already since late 2014 cannot cope with a higher dollar and that the EZ loves it.
  • SD
    Stephen D. | Contributor
    25 February 2017 @ 00:32
    Steve Diggle here. This is a long video! I apologise for going on as long. But i will answer any questions if anyone has them.
  • DS
    David S.
    24 February 2017 @ 22:22
    Great interview with many insights. I will watch several times over the next few weeks. DLS
  • DS
    David S.
    24 February 2017 @ 22:21
    Re: Steven R.: It does take time, but your are given a 5 minute video summary and a transcript. You can listen to the summary and scan the transcript to see where you would like to jump into the chapters. I like the extended interviews someone who has real experience and insight like Mr. Diggle. It is a matter of priorities. DLS
  • JS
    John S.
    24 February 2017 @ 21:36
    With RVTV more is invariably better! Love these lengthly discussions
  • AG
    Alex G.
    24 February 2017 @ 20:57
    Great interview One note though I'm seeing some left wingers who are now being critical of Obama are saying that he voted too much in favor of corporations.
  • SR
    Steve R.
    24 February 2017 @ 20:34
    Whilst I truly love everything about RV, I'm struggling to find enough free time to get through 5+ hours of videos plus RV publications each week. To get the most from this content you have to listen intently, not just let them be background viewing/listening. And sometimes you need to watch/listen several times to get the most from the content, whilst possibly making notes. I don't want to be in the position of having to pick and choose which ones to watch/read based on my available time. Sometimes less is actually better. Just my personal opinion.
  • KO
    Kieran O.
    24 February 2017 @ 17:34
    99 Minutes with Mr. Diggle!? Incredible! Thanks for mentioning $OXB again, very interesting company. I know you read the comments, so I'll recommend an undervalued biotech company for you as well. ($RETA) Reata Pharmaceuticals has developed the most potent Nrf-2 targeting compound known to man. 200x more potent than the best natural occuring Nrf-2 targeter, Sulforaphane. On top of its Nrf-2 targeting capabilities, it also inhibits both mTORC1 and mTORC2, which most mTOR inhibitors can't even do. If you have the appropriate background you'll know the potential such a drug could have. DISCLOSE: I own this company in my fund and personal account. Cheers!