GERMANY - Allianz Real Estate's move into European real estate lending is driven by "market opportunity" created by the withdrawal of banks, rather than pressures from Solvency II, according to its chief executive.

Olivier Piani said it was "dangerous" to devise an investment strategy around regulations that were yet to exist or to be determined.

The remarks were made following a presentation at EXPO Real in Munich, where Piani and a number of Allianz Real Estate's regional chief executives confirmed that the company was still targeting a significant volume of new investments in direct real estate and property debt.

Piani said Allianz Real Estate would have liked to have invested more than the €1.5bn of equity it deployed in European real estate markets in 2011 so far, but it had been forced to make acquisitions "selectively" given the backdrop of economic and financial turmoil.

Meanwhile, Allianz Real Estate built up a €500m commercial real estate loan book in 2011 after making its debut deal earlier in the year: a €300m loan to a fund acquiring Deutsche Bank's headquarters in Frankfurt for €600m.

But there is potential for this loan book to grow substantially. Charles Pridgeon, chief investment officer, said the insurance company asset manager had the scale to make more large loan deals and did not have to resort to syndicating with other lenders.

The focus for lending remains within German borders, but the insurer did not rule out financing property deals elsewhere in Europe.

When asked by IP Real Estate whether the move into the debt space was driven partly by incoming Solvency II regulations - which have the potential to render real estate lending more attractive on a capital-reserve basis versus direct property investments - Piani said it was purely based on the market opportunity.

Pridgeon said the potential for new lending deals in Europe was significant and only be limited by the number of appropriate opportunities Allianz Real Estate found.

The company is also looking into how to build up an exposure to Asian markets and invest in China "intelligently", Pridgeon added.

He said the expectation was to focus on the retail sector in China, which would put it in line with its existing strategy to increase its weighting in Europe to retail and away from offices.

Piani said the market should expect to see more activity in the future from Allianz Real Estate both in Asia and North America.

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