The volume of capital flowing into listed real estate in Germany in the second quarter of the year was the highest in “capital markets history”, according to a new report.

A study by consultancies Barkow and Akselrod showed that €1.8bn was invested in listed property in Germany, suggesting it had been the best quarter ever.

When combined with first-quarter figures, the consultancies showed that €3.3bn was invested during the first half of 2014, a year-on-year increase of 59%.

”The demand came primarily from foreign institutional investors,” Peter Barkow, managing director of Barkow consulting, told IP Real Estate.

Interest in listed real estate remained limited among domestic institutional investors, however, he said, noting that there had “been a few larger, first-time allocations last year” and “Allianz Real Estate announced it wants to increase its activities in this field”.

He added: “German institutions are very slowly but steadily rethinking their strategy mainly because of a lack of alternative investments – and because listed real estate can be invested in quickly.”

The supply was fuelled mainly by private equity funds selling their holdings or from initial public offerings (IPOs) – such as the stock-market flotation of Deutsche Annington last year – predominantly in the residential market, the consultant said.

Barkow said there was potential for new products in the commercial real estate sectors, as they were “heavily underpenetrated” in Germany and “market participants are hoping for growth”.

The report also found that more than €3bn in capital flowed into non-listed, open-ended institutional Spezialfonds, more than 14% during the same period in 2013.

Interest in public open-ended real estate funds (GOEFs) dwindled with inflows halving to €1.4bn in the first six months compared to H1 2013.

“There are market rumours that institutions are again showing interest in GOEFs, but these funds will never have the same significance as before the crisis – and this is one of the reasons why Spezialfonds are doing so well,” Barkow said.

Commenting on the planned rental cap (Mietpreisbremse), the consultant noted “it cannot be positive”. But he added it remained to be seen “how negative” the impact of this measure will be as the proposal was “still changing on a weekly basis”.

Barkow explained the impact on institutional portfolios would depend on their composition as holdings in economically weaker regions would be less affected because their rental markets were not yet “stressed”.