New research reports that Germany is now a top contender for preferred investment areas in non-listed real estate funds and as such, has replaced the UK as the preferred location.
According to a recent survey by the European Association for Investors in Non-listed Real Estate Vehicles (INREV), the retail sector in Germany was favored by 36% of investors as their favorite destination to invest for 2011. This is a major shift for Germany because in 2010 they did not even make the top ten list. Reports show that Germany, France, and the Nordic markets are all preferred over the UK currently.
The UK has been a hot investment area the past couple of years in the retail, office, and industrial/logistics sectors so this change is significant. According to Lonneke Lowik, director of research and market information, this shift is because investors are more skiddish of the UK now because of the economic recovery slowing down and higher property prices. The UK is still a contender in the top ten but there is growing confidence by investors for the German and other European markets.
The survey has also revealed that almost 70% of investors and fund managers believe that the supply and demand of their preferred locations are adequate, which is a different perception than they had in a 2010 survey. Those that prefer a single country strategy have increased 13 percent up to 90 percent from last year as well. Lowik states that investors find that investing in one individual location or sector is safer than diversifying assets through investments in different countries.
Real estate derivatives and open-end funds have increased threefold since last year and the attractiveness of seeded funds have increased to 80 percent with investors and fund managers. According to research and database manager Shetal Patel, investors want more security and knowledge before making investments.