RREEF poised to move up the risk curve

RREEF, the real estate investment vehicle of Deutsche Bank, is gearing up to move up the risk curve, Gianluca Muzzi, managing director of RREEF Europe (excluding Germany) told PropertyEU. 'Investment has been mainly focused on the UK, and core countries in Continental Europe like France and Germany. But we are now broadening our investment scope and looking at single asset opportunities in other countries, for example in southern Europe and CEE.'

The investment manager is not only broadening its geographic scope, Muzzi added. 'The core space is becoming crowded, we're willing now to take some more risk in terms of product and look at secondary locations for example. We will not necessarily focus only on plain vanilla products.'

Muzzi declined to comment on whether RREEF was considering new fund launches, but said it was currently reviewing a number of strategies. Pointing to new money coming out of Asia, he said: 'The good news is that there's more capital to deploy. If you look at global trends, until recently investors looked at Asia as a destination. But it is also increasingly a source of capital. In Korea and Malaysia, there's a lot of capital sitting in pension funds that needs to be deployed and their own markets are relatively limited.'

US investors are also increasingly targeting Europe for real estate investment, Muzzi noted. 'When the crisis broke out they retreated to their domestic market but they are now becoming more active again globally. The trend started to become visible towards the end of 2010 and has continued in the first months of this year.'

While most Asian investors currently invest in Europe primarily through separate mandates, Muzzi does not rule out the possibility of increased appetite at a future date for participation in structured vehicles. 'The growth opportunities in the European market are not as good as in Asia, but at the end of the day Europe has proven resilient, and there are still some good opportunities in the core arena. It makes sense to diversify geographically in the Eurozone. A pan-European fund could be of interest to the market, not necessarily to Asian investors, but to European pension funds.'

RREEF is not the only asset manager with plans to move up the risk curve. Indeed, the latest edition of PropertyEU Magazine reveals that a growing range of players have plans to make similar moves. To read more, click on the link below and subscribe to PropertyEU.