German Real Estate More Attractive Than UK To Some Investors

By Jonathan Buck  Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Germany has overtaken the U.K. as the preferred location for investment in nonlisted real estate funds, according to a survey released Tuesday by the European real-estate investment body Inrev.

"This is a dramatic change in sentiment," said Inrev's director of research and market information Lonneke Loewik.

"While the U.K. remains well represented in the top 10, investors seem wary of higher property prices and a slower economic recovery in the U.K., but attracted by growing confidence in the German and other European markets," she said.

The U.K. is now less attractive than Germany, France and Nordic countries, according to the survey, the seventh of its kind, which was carried out last month and gauges insights from investors, funds managers and fund of fund managers. Inrev, the European Association for Investors in Non-listed Real Estate Vehicles, has 341 members drawn from leading institutional investors, fund managers, promoters and advisors across Europe and represents real-estate assets under management of over EUR135 billion.

In terms of investment strategies, 90% of investors expressed a preference for a single country strategy, an increase of 13 percentage points on 2010. Almost 90% of investors also preferred a single sector strategy, such as retail, office or industrial.

"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, multi-sector strategy," Loewik said.

Appetite for the nonlisted real-estate sector has increased over the past two years, with over half of respondents intending to increase their allocation to the nonlisted sector. Access to expert fund managers and the importance of risk/return ratios were seen as key influencing factors.

Though transparency has improved, investors were looking for greater involvement and greater control, with 90% of investors surveyed preferring to be active investors compared with less than 80% last year.

-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; jonathan.buck@dowjones.com

via online.wsj.com