A third (37%) of institutional investors considers the price level of German real estate investments to be overpriced. For about half of the asset managers, it is just at the limit of profitability and thus still acceptable, shows a survey pursued by Universal Investment. German real estate is, therefore, becoming less attractive to respondents: The share of new investments in German properties is falling from 67.5 percent last year to 45 percent in 2017.
Outside the EU, only one-eighth of institutional investors considers prices to be too high. Especially North America and Asia are gaining popularity, where 19 percent and 8 percent of new investments are planned to be made. Last year, only 5.7 percent of new investments were invested in North America and 1.8 percent in Asia. Europe as a whole remains popular, although a quarter of asset managers considers the market to be overpriced. 25 percent (2016: 22.5 percent) of new investments are planned to be made in Europe.
"This trend is commensurate with the analyses of the real estate portfolios on our platform, with the share of North American real estate having already risen in the past twelve months by one-third", explains Alexander Tannenbaum, Managing Director responsible for the real estate business of Universal-Investment.
The majority of investments will continue to flow into office properties. However, with 37 percent of respondents stating this segment as their target type, office properties do not gain popularity. Retail and logistics properties were able to increase their share of new investments by four percentage points each, and are expected to account for 25 percent and 12 percent of new investments in 2017. "Institutional investors are also increasingly diversifying their real estate portfolios across sectors and markets, and rightly so", Tannenbaum says.
Further trends in the expectations of real estate investors can be found in the press release of Universal Investment.