EUROPE - French institutional exposure to real estate trebled over the past 12 months, according to the European Institutional Asset Management Survey (EIAMS) conducted by IP Real Estate's sister publication Investment & Pensions Europe.

While overall real estate investment remained constant at 7% of total assets compared with 2009, figures for 2010 showed a noticeable increase in investment in a number of regions, including the Benelux countries.

Property holdings in France rebounded after falling to only 2% of total assets in 2009, climbing to 6% last year.

However, institutional investors in the Netherlands, Luxembourg and Belgium saw real estate investment increase by 4 percentage points to 12%.

A breakdown of all respondents, spreading across 25 countries, showed that the majority chose to invest in domestic and European markets, with 63% of properties held in respective domestic markets. 

The remaining 37% was almost evenly split between the remainder of the world and Europe, with 17% invested in the continent.

French investors chose to split exposure evenly between all three geographic regions, with 30% invested at home, a further 32% in the Europe excluding France, and the remaining 38% located outside the continent.

Institutional investors across Europe also shifted their fixed income exposure from sovereign debt to corporate bonds, with investment in the asset class reaching its highest level in five years.

EIAMS found that fixed income allocations were on the rise, accounting for 58% of respondents' portfolios, up from 51% last year.

However, 31% said they planned to slash government and sovereign debt - a 10 percentage point increase over last year's result.

Only 9% - a 1 percentage point increase - said they planned to offload corporate bonds. In contrast, 22% said they would be increasing bond holdings, with corporate bonds by far the most popular option among investors, with 30% opting for these over government debt.

Michael Gartmann, managing director and head of German institutional business at Invesco, noted that fixed income allocations were at their highest since 2006.

"Fixed income continues gaining more ground," he said. "Last year's freefall in equities appears to have been halted with just a small decline, and the sharp reduction in cash suggests investors have spotted more attractive opportunities."

The survey - which canvassed pension funds and insurance companies with more than €1.2trn in combined assets under management - also found that consultants had fallen further out of favour across most regions, with a 3 percentage point drop in overall usage to only 49%.

Consultancy use in the UK remained steady at 83%, while the CEE countries showed a significant dip, dropping from 33% to just 7%.

France, Switzerland and Germany all saw smaller downturns, while the Benelux countries indicated a small uptick in consultancy use.

Ireland bucked the downward trend, with 87% of respondents using consultants, up from 57% year on year.

Nearly two-thirds of respondents said they employed consultants for asset allocation decisions, while 54% said they used them to select an investment manager.

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