German institutional investors could invest up to EUR 8.1 bn into non-listed funds over the next three years, according to INREV's Investor Universe Germany Survey 2010. Overall around EUR 26.2 bn is slated to be invested in real estate as an asset class.

German institutional investors could invest up to EUR 8.1 bn into non-listed funds over the next three years, according to INREV's Investor Universe Germany Survey 2010. Overall around EUR 26.2 bn is slated to be invested in real estate as an asset class.

The German non-listed real estate universe is estimated at just over EUR 16 bn (excluding other investors) and is expected to grow to EUR 24.4 bn over the next three years, INREV said.

Current real estate exposures of German institutions at EUR 59 bn are significantly below their target allocations of EUR 84.7 bn. If investors exploit their current full real estate target allocations an additional EUR 25 bn will enter the market. A further EUR 1.2 bn will come from increased allocations creating a total institutional real estate market of EUR 85.9 bn.

'German investors are open to invest in non-listed vehicles but together with joint ventures they currently serve as supplements to direct portfolios. Direct real estate remains the largest component but there will be some shift in this trend as we see a reduction in direct domestic exposures and an increase in non-listed funds such as through transferring assets to (Spezialfonds),' said Lonneke Löwik, Director Research and Market Information, INREV.

The German real estate universe is dominated by life insurance companies, which hold around two thirds of the total assets. This is followed by pension schemes for professional occupations (berufsständische Versorgungswerke) with 16% and other insurance companies with 13%. Pension funds only hold a small share of the real estate universe, which reflects their size rather than their appetite for real estate.

This is the second Investor Universe project with a study on the UK released in March. A third study on the Dutch Investor Universe will be released in the coming months.