German institutional investors are increasingly switching billions of euros invested directly in real estate into property funds, the association representing investors in non-listed real estate funds Inrev said on Tuesday. 'It is clear that a major trend is underway with German insurers and pension funds increasingly choosing to invest indirectly in real estate though non-listed funds rather than directly in buildings, both abroad and also in their home market,' said Georg Allendorf, managing director at RREEF Alternatives in Germany and vice-chairman of Inrev's management board.
German institutional investors are increasingly switching billions of euros invested directly in real estate into property funds, the association representing investors in non-listed real estate funds Inrev said on Tuesday. 'It is clear that a major trend is underway with German insurers and pension funds increasingly choosing to invest indirectly in real estate though non-listed funds rather than directly in buildings, both abroad and also in their home market,' said Georg Allendorf, managing director at RREEF Alternatives in Germany and vice-chairman of Inrev's management board.
'While it is difficult to quantify this through available data, it is apparent anecdotally what is happening. This is based on feedback from our German members and also the strong demand for Inrev services from Germany, in terms of higher professional standards and investment transparency for these funds,' he said at an Inrev seminar in Frankfurt.
Inrev's German membership has nearly doubled in the past 17 months to 34 from 18 at the start of 2007. 'Institutional investors are investment managers not building managers. By investing in real estate through fund vehicles they can manage their portfolios more efficiently, save costs, and achieve better diversification in investment assets,' Inrev chief executive Lisette van Doorn said. A total of about EUR 1bn was committed by German institutional investors to non-listed real estate funds in 2007, down from around EUR 1.22bn the previous year, mostly due to a fall in transaction volumes across Europe following the onset of the credit crunch.
Inrev, which has recently launched a European German sub-index as part of its Institutional Index for fund investment returns, said the German market produced a total return of 1.2% in 2007, which compares to 12.5% for the continental European market as a whole. The country ranked behind the UK as the poorest performing non-listed real estate funds market last year.
