REAL ESTATE - Dutch pension funds are increasingly shifting their investments from direct to indirect real estate, research bureau PropertyNL said.

In 2005, their indirect real estate portfolios have increased by almost 30% to €39.5bn, because of participations in joint ventures and real estate funds, its yearly survey found.

According to PropertyNL, the better returns on indirect real estate have sped-up this development. At least 50% of the surveyed pension schemes reported returns in double figures, with company pension fund of Gist Brocades even scoring over 40%.

It however noticed that insurers have hardly increased their investments in indirect real estate so far.

Within the total investment portfolio of pension funds, the share of indirect real estate rose from 5.7% to 6.2% in 2005, the survey showed. During the same period, the investments in direct real estate declined by 0,7% to 3.7%.

The top 10 investors in indirect real estate is fully made-up by pension schemes, led by the €194bn civil service scheme ABP, PropertyNL said. In its opinion, ABP’s real estate portfolio of €22.1bn consists fully of indirect real estate.

The largest investment in direct real estate were carried out by (non)listed funds and banks, Property NL added.

PropertyNL also concluded that two-thirds of the 40 largest pension schemes are below their target for real estate investments. Whilst the average target for their real estate portfolio is 12.7%, their portfolios contain 11.7% on average. The largest shortfall was found at the Doctors Pension Funds, which needs to double its real estate investments to 10%.

The research bureau focuses on commercial real estate and the housing market. For its survey, it used the annual reports of the 40 largest pensions funds and data of Statistics Netherlands CBS, and spoke to investors, it said.

The study also found that UK investors have invested €1.2bn in Dutch property in the first three quarters of 2006.