Asset management study: Investors want to increase real estate holdings

According to a new study, real estate is still highly demanded by investors. Their focus is on residential real estate.

Residential property in A-locations is a trend for asset managers. Source: pexels.com

The recently published Real Estate Asset Management study 2019 of the management consultants and auditors of Ernst & Young explains opportunities, risks and developments in the real estate industry together with Vonovia. 40 companies operating predominantly in Germany were interviewed for a nationwide assessment on the development of asset management.

In particular, real estate is very popular: 90 percent of the surveyed management companies plan to implement more apartments and houses in their portfolios, with also 90 percent opting for a long-term holding period of at least eight years. Residential real estate is in particular demand here. 82 percent manage this asset class, ahead of office (56 percent) and retail (38 percent). More than two-thirds of the respondents now believe that the current asset base consists of 76 to 99 per cent residential real estate, of which 90 per cent are in the “Big Seven” cities. Overall, 80 percent of the stock is distributed across all A-locations.

A major trend for the current year for almost all surveyed asset managers (96 percent approval) is the changing demands on real estate asset management due to the increased volume of mixed-use real estate, which combines, for example, residential, commercial, office spaces and parking opportunities. According to the official press release, these mixed-use items require “versatile administration know-how”, again requesting “generalists” more than ever before.

In addition, 82 percent of the surveyed asset managers agree with the statement that they want to include project developments in the value chain in the future. In general, a majority of 79 percent want to extend their range of services to investment management. Post-consolidation by topping up existing properties is on the agenda for the majority of 67 percent of managers. While 69 percent want to develop wasteland, 44 percent plan to entirely develop their own new construction projects. Almost half want to invest in full conversion of office buildings to living space in addition to comprehensive modernisation.

The Real Estate Asset Management study has been published annually by Ernst & Young since 2016. This year, the surveyed managers mainly manage assets of their own companies (63 percent). Customer groups such as investors (39 percent), fund companies (24 percent), family offices (21 percent) and banks (five percent) follow in decreasing frequency.

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