GERMANY - More than one-third of institutional investors active in the German real estate markets intend to increase their exposure to the region this year, according to German investment group Estavis.
The company surveyed 44 investors - predominately German pension funds and insurance companies, as well as investors from the US, the UK and Scandinavia - and discovered that 39% planned to increase their German investments in 2009, while 57% intended to maintain their current exposure and 4% planned to reduce it.
"During our previous survey, just before the Lehman bankruptcy, as many as 25% of the polled investors had voiced their intention to reduce their real estate quota in Germany; at present, that figure is down to 4%," said Rainer Schorr, chief executive of Estavis.
Schorr added that German institutional investors, including pension funds and insurance companies, have shown a particular interest in their domestic market.
That said, only 2% expected the transactional market in Germany to recover before the end of the year; 66% did not expect it to recover before 2010; 16% forecast the recovery to arrive in 2011.
Nearly all survey respondents identified west German states as their investment locations of choice, with only 14% signaling an inclination to invest in East Germany, although 30% were interested in Berlin.
Most investor capital will be targeting commercial property in Germany, according to the survey, which showed that 61% of investors planned to invest exclusively in commercial real estate, while only 14% intended to invest "primarily" in residential assets.
The minimum yield that investors expected on average was 5.7% for core-plus properties, 7.1% for value-added and 8.5% for opportunistic.
The minimum required returns from German real estate were in the following ranges: 4-8% for core-plus; 5-10% for value-added; 6-15% for opportunistic.