GERMANY/UK - Germany has replaced the UK as the preferred location for investment in non-listed real estate funds, new research shows.
A survey by the European Association for Investors in Non-listed Real Estate Vehicles (INREV) found German retail was selected by 36% of investors as their preferred intended location and sector for 2011, signalling a marked shift in approach from 2010, when German retail failed to reach the top ten. In contrast, the UK is now also less attractive than the French and Nordic markets.
Director Research and Market Information Lonneke Löwik said: "This is a dramatic change in sentiment. Over the last two years the UK dominated the rankings with UK retail, UK office and UK industrial/logistics included in the top four most preferred country/sector combinations. While the UK remains well represented in the top ten, 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."
The survey also showed nearly 70% of both investors and fund managers noted adequate supply of investment products and interest in their preferred markets, reversing perceptions from the 2010 survey.
Additionally, 90% of investors prefer a single country strategy, up 13% from the previous survey. According to Löwik this suggests investors find investing in an individual location or sector less risky than diversifying assets through a multi-country multi-sector strategy.
Investors are also showing more interest in real estate derivatives and open end funds which increased threefold since last year. Similarly, seeded funds have gained in attractiveness with 80% of both investors and fund managers, and more than 70% of fund of funds mangers expressing a preference for them.
Research and database manager Shetal Patel said: "It would seem that investors are seeking greater security and knowledge before making their investment decisions."
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