German real estate is expensive for institutional investors, according to a survey by Universal-Investment.
The fourth annual survey of institutional investors found prices for new investments are considered high by respondents.
Around half of respondents consider real estate prices in Germany to be high – but still marginally acceptable. A further 37% consider prices to be too high.
Investors plan to make 45% of new investments in the German market, compared with 67.5% last year.
The survey of institutional investors managing around €50bn of assets, also found that real estate in North America is rising in popularity.
Respondents declared their intention to make 19% of new investments in the region, compared with 5.7% in the previous year.
Alexander Tannenbaum, managing director responsible for real estate at Universal-Investment, said the trend was in line with analysis of real estate portfolios on the firm’s own platform.
Only a quarter of respondents view prices in Europe as unacceptable.
The survey found that institutional investors are relying more and more on indirect real estate investments for new investments, with some 87% likely in the next 12 months.
Direct real estate investment has fallen further to 13%, reflecting an ongoing trend towards indirect investment vehicles.
Open-ended Spezial-AIF vehicles are proving popular, the survey found. Demand for other indirect investment vehicles is lower. Around 12.5% will be directly invested.
“Indirect investment vehicles are becoming more and more popular,” said Tannenbaum.
The attractiveness of the office sector remained at 37%, while an increase was recorded for retail and for logistics.
The residential sector fell to around 19 % from 34% in the previous year.
“Institutional investors are increasingly diversifying their real estate portfolios across sectors and markets, and rightly so,” Tannenbaum said.
The survey found that 75% of respondents want to invest in real estate via Master KVG solutions.
“For some years now we have been experiencing a visible trend towards Master KVGs with a split of administration and asset management,” Tannenbaum said.
Around 75% of respondents plan to use a Master KVG in the next 12 months.
