German insurances to boost RE investment, focus on residential - E&Y

Some 70% of German insurance companies intend to raise their investment allocation to real estate, with just 5% intending to lower it, the highest proportion seen in recent years, according to a survey released in summer by Ernst & Young Real Estate.

An even higher 80% responded that they intend to invest in residential property - a figure that still stood at 55% in the 2008 survey. Sector commentator and publicist Rainer Zitelmann described the housing intentions as "just about sensational". "It has not been all that long since insurance companies wanted nothing to do with residential investments," he wrote in a commentary. "They used to be found almost exclusively on the seller side - apart from a few farsighted investors such as AmpegaGerling." He sees apartment investment as a 'megatrend' based on three criteria: Prices have returned to a more moderate level after the price inflation triggered by foreign buyers, residential investments are deemed a stabilising factor in any real estate portfolio in economically difficult times, and the continuous decline in housing completions has raised hopes for rent increases in German conurbations.

PFE COMMENT: The wake-up call in the investment industry to residential assets is long overdue, and a number of capital investment companies have launched institutional funds for residential real estate in recent months.... (Full story coming in PFE 132)