Real estate worth 79 billion euros was traded in Germany in 2020.

A total of 264 real estate funds are available to German investors. Geographically, Germany with 68 funds and Europe with 58 funds are the most important investment destinations. Among the funds with an investment focus on Germany, residential use (20) dominates with a share of almost one-third, ahead of office (16) and retail (9). Only in fourth place are funds with diversified strategies. The range of logistics funds is surprisingly small, with only three products.

In terms of the risk profiles of the investment products, the focus is clearly on stable and secure cash flows. More than two-thirds of the real estate funds on offer (180) belong to the core segment. Only about a quarter (61) pursue a value-add strategy, which focuses on profit realization rather than current distributions. Asked about the target return expectation over the entire holding period of the real estate fund (IRR), participants gave an average value of 4.3 percent for residential real estate funds in Germany. For retail parks and office properties, expectations are significantly higher at 5.5 percent and 6.7 percent, respectively.

Source: Real Estate FundsNews March 2021 issue