The majority of investors in non-listed real estate funds are expected to favour investments in Germany during 2011, according to a report by association INREV, released today.
In its seventh INREV Investment Intentions Survey, the association said that 36 percent of investors signalled that German retail was their preferred location and sector. This comes in contrast to its findings last year when German retail failed to figure in the top 10 favoured type of investments.
Another new trend discovered by INREV was that UK investments in retail, offices and logistics are not as popular as they were last year. Lonneke Lowik, director of research at INREV described the sentiment shift as “dramatic.” She said: “Over the last two years the UK dominated the rankings… While the UK remains well represented in the top 10, investors seem wary of higher property prices and a slower economic recovery in the UK but attracted by growing confidence in the German and other European markets.”
INREV added that 90 percent of investors were seeking to invest via single-country strategies – 13 percent more than those that expressed this preference in 2010. Almost 90 percent also want to invest in single-sector strategies too.
Lowik said: “These statistics suggest that investors believe that possessing a deeper understanding of a particular location or sector could be less risky than the benefits of diversification through a multi-country or multi-sector strategy.”
Core investments remain the risk strategy of choice for investors, INREV said, but the association highlighted a discrepancy between investors’ appetite for core investments and what fund managers believed investors’ appetite for core investments to be. It said 86 percent of fund managers believed investors would prioritise core investments in 2011 whereas only 67 percent said that was the case.
INREV said interest in investing in open-ended funds had increased by three times in the last year. Seeded funds were also a more popular choice for both investors and managers. “It would seem that investors are seeking greater security and knowledge before making their investment decisions,” said Shetal Patel, INREV research and database manager.
Accordingly, INREV also found 90 percent of investors wanted greater involvement and control in their investments, up 10 percent on last year.