GERMANY - Out of Germany's 156 institutional investors, Pensionskassen were the only ones to identify direct real estate holdings as more risky than indirect investments in a survey commissioned by AXA Investment Managers.

All other institutional investors, including insurance companies and banks, said indirect investments were more risky.

AXA IM said it had not expected the result and predicted a change once fears about illiquidity in real estate funds and fund closures, which rattled the German fund industry in the wake of the crisis, had subsided.

The asset manager was also surprised to find that German institutionals had quite differing definitions of risk in real estate investments.

Around one-fourth said the major risk was losing money, while another 18% said it was 'missing the target'. Approximately 16% said they saw risks as opportunities.

Seven investors conceded they lacked a standardised risk measurement for their real estate investments.

The surveyed investors have more than €156bn in assets under management.

In other news, just one-third of German retirement providers showed interest in a survey on infrastructure as an investment, but private equity consultants Fleischhauer, Hoyer & Partner (FHP) see that changing soon.

Out of the 36 institutionals that replied to FHP's survey, 33% are already invested in infrastructure, and more than half have plans for an allocation in 2011 or 2012.

Most made the decision because of the steady returns the investments are offering, the diversification effect and the possible protection against inflation.

However, the lack of transparency, the small number of funds on the market, the fee structure and lack of information of the subject were major obstacles for making an investment, they said.

The institutional investors surveyed currently prefer single non-listed funds in European 'brownfield' projects, which they most often allocate to their alternatives exposure.

Return expectations range from 5.5% to 9.3%, which, according to studies by FHP, is 'realistic'.