GERMANY - Open real estate funds (OIF) will lose attractiveness as a vehicle for real estate investments for German institutional investors, according to Reinhard Mattern, managing director of iii-investments.
Mattern said Spezialfonds would gain in importance, as they were tailored to institutional investors' needs.
Under new regulations that will come into effect from 2013, there will be a 24-month holding period on larger investments in OIF.
The government had taken this step after several OIF had to close in the wake of the financial crisis due to liquidity issues, as mainly institutional investors had pulled large sums.
However, this holding period will make it less attractive for institutional investors to invest in these mutual funds.
For other investors - such as insurance companies and insurance-based Pensionskassen - it will be legally impossible, as they must guarantee six-months' liquidity in real estate investments, a spokesman for iii told IPE.
There is also an issue with a leveraging cap of 30% under the new regulations, which renders the OIF less attractive for institutionals.
However, Spezialfonds - specialised institutional investor vehicles - can divert from the regulations on an individual contract basis, and they, therefore, will attract more institutional investors, iii said.
Meanwhile, the German BVI has released statistics according to which open real estate funds are diversifying more internationally than before.
Additionally, they are also making purchases outside Europe to "diversify risk for investors" - in addition to diversifying sectors and property sizes, a spokesman for the asset management industry federation told IPE.
In 2010, German OIF had invested 29.1% in Germany, 57.4% in the rest of Europe and 13.5% in the rest of the world - compared with a 42.4% Germany quota five years ago.
Elsewhere, Colliers International found in a survey that international investors were returning to German property markets, and that demand for offices was high.
In February 2011, Colliers asked 700 institutional and retail investors about their views on the German property market.
More than 90% of respondents said they wanted to invest in offices, while 78% said retail, logistics or infrastructure was on the top of their list.
However, regarding volume, more money could be flowing into retail property as investors are willing to invest around €55m per transaction in this sector, but only €37m in office property.
For most of the investors, office investments will be an addition to their core or core-plus portfolio, while most are willing to take a bit more risk in retail and logistics investments, according to Andreas Trump, head of research for Germany at Colliers.
Most investors are still looking at so-called A cities, mainly Hamburg and Munich, followed by Berlin, Düsseldorf and Frankfurt.
However, B cities are also sought after, Trump said, confirming findings by Patrizia, which noted special interest in university towns as A locations became more expensive. German roundup: Patrizia, IMC, Evangelische Stiftung Pflege Schönau
