C&W sees more appetite from institutional investors

Institutional investors will show more appetite for real estate in the second half of 2009, adviser Cushman & Wakefield predicts. 'Whilst many institutional investors used the first half of the year in particular for the strategic realignment of their portfolios in view of the global economic crisis and, as a result, made negligible investments in indirect real estate assets, there are increasing signs that we are about to enter a renewed phase of investment,' according to Martin Braun, Head of C&W’s Capital Markets Group in Germany.

Investment volumes of institutional investors in non-index, indirect real estate assets dropped 60% last year after a record high in 2007.

Over the past few months, many institutional investors have expanded their real estate portfolios as a result of the disproportionate devaluation of their stocks and commodity portfolios. Christian Bock, Consultant with C&W’s Corporate Finance Team, adds: 'Initially, this denominator effect adversely affected the investment activities of institutional investors, causing them to shy away from additional real estate investments. This was especially true of institutional investors such as German insurers and pension funds which are subject to certain quantitative limitations in terms of maximum real estate investment limits. With prospects of stabilisation of the entire economy and a recovery of the stocks and commodities markets, there is again increasing scope for real estate investments.'

In addition to products with an investment focus on Germany, increased interest has also been observed in real estate investment funds which invest in the Anglo-American real estate markets in particular. Summing up the mood of many institutional investors, Braun says: 'In the US and UK in particular, i.e., the two markets that experienced the most severe price corrections, it is certainly a propitious time to enter the market.'