Investors are looking for ‘needle in haystack’

Fierce competition in the marketplace has left investors looking for the ‘needle in the haystack’, according to Annette Kröger, head of acquisitions at Germany at Allianz Real Estate, the real estate arm of German insurer Allianz.

Speaking at Allianz Real Estate’s annual Round Table at Expo Real in Munich last week, Kröger said that despite the difficult market environment, Allianz Real Estate ‘can still secure similar investment volumes to last year’.

The real estate group expects to do up to €2 bn of real estate deals by the year-end, according to Allianz Real Estate’s CEO Olivier Piani, also speaking at the Round Table. However, it remains a two-tier market, he said. ‘The UK and Germany are still heading the pack. France, Spain and Italy are still lagging behind. The story there is not so clear.’

Allianz Real Estate has acquired €8 bn of assets in the past five years. However, increased competition in the market has forced the company to tweak its real estate investment strategy, according to its CIO, Charles Pridgeon.

‘Liquidity is transposing borders in way that would have been unthinkable a couple of years ago,’ he said. ‘ We have had to look into niche markets to find areas that have been overlooked by other capital sources.’

Allianz will continue to do 80% to 90% of its business in Europe, Pridgeon said, although it remains bullish on the US. It is also interested in Asia, but Pridgeon admitted that it is ‘tricky’ to find opportunities and that many markets have become too expensive. ‘We continue to balance risks and rewards around the globe to get 4% to 5%,’ he added.

In addition, the company has grown its debt portfolio in the past year to €2bn in Europe and €6 bn in the US, according to Roland Fuchs, its head of European real estate finance. ‘Debt investments are a supplementary way to invest,’ he said. ‘We focus mainly on Germany and France, but we want to add core markets such as the Benelux countries, Spain and Italy. We’d like to increase our European debt portfolio to €2.5 bn by the year-end, including new debt investments outside France and Germany.’