Eurohypo: 'German open-ended funds have EUR 30b warchest'

German open-ended real estate funds are well positioned to take advantage of the current market cycle, according to research published by Frankfurt-based real estate bank Eurohypo. The funds have EUR 20-30bn to spend from recent inflows and the proceeds from massive disposal programmes. Looking ahead, Eurohypo said there could be an annual EUR 10bn available from retail investors or potentially more should there be a new shift from equity to real estate funds.

Recent inflows are a reward from German retail investors for the cautious management, including a low gearing strategy and low volatility, Eurohypo noted in a report entitled 'German Open-End Funds: Preparing Their Come-Back?' while asset disposal programmes are concluding. As German funds get ready to buy, Eurohypo said a much softer competitive environment should give them more manoeuvring room.

Eurohypo surmised that the UK might be a privileged target for Germany's property funds. 'Their investments will be concentrated on large, trophy assets, therefore adding another source of market consolidation,' the report said. A recent change in the funds' strategy was the rebranding of all major vehicles to Global or European funds, Eurohypo said. In Europe, these funds have until now been particularly active in Paris and the Benelux.