“Returns on real estate funds will not drop by leaps and bounds”

The rush for real estate funds is unbroken. The prognoses for this year do not look bad. Even if the returns are more as high as they have been in years past.

De Fonds Hausinvest holds a stake in the Highlight Towers in Munich.

Dhe rush of investors to real estate funds is apparently unbroken. All over the world, the record for inflows from 2008 was even exceeded in 2019, as the information service provider Prequin has calculated. In the past year, the funds collected $ 151 billion, in the previous record year it was $ 148 billion. For Germany, too, Sonja Knorr from the Scope analysis company reports that there are still high inflows and a strong rush of investors. “What has been added are the new funds from both established providers of open-ended mutual real estate funds and real estate houses trying to fill this investment category,” said Knorr.

In some cases, inflows are artificially restricted

The fund companies would continue to artificially limit some of the inflows of funds. For example, the Sparkasse fund company Deka has blocked its Europe fund for new money, with the exception of only savings plans and reinvestments. Instead, they bring new products. The large fund “Hausinvest” of the Commerzbank subsidiary Commerz Real opened up for residential real estate, together with the Wertgrund company, and in 2019 generated enormous inflows of funds and also invested on a large scale. The funds “Grundbesitz Europa” from DWS and “UniImmo: Wohnen ZBI” from Union Investment could probably have raised more than 1.5 billion euros.

“Hausinvest” fund invests in Kaufhof branches

In any case, Commerz Real reports a cash inflow of around 1.4 billion euros for the “Hausinvest”, after 900 million euros in the previous year. Last year there were purchases and sales of properties worth 7.1 billion euros. Examples are the acquisition of a “Millennium” portfolio of 49 properties in German premium locations for 2.7 billion euros, the participation in ten Kaufhof department stores in the city centers of the five most important German metropolises for 412 million euros and the sale of a portfolio of six office properties in the Netherlands for 370 million euros. The performance of the fund was 2.5 percent per year as of December 31, after 2.1 percent in the previous year. In addition, the liquidity quota has been reduced to around 10 percent. “At the same time, we were able to increase the leverage, i.e. the leverage, to around 15 percent through a higher debt capital ratio and thus secure the historically low level of interest rates for the fund in the long term,” said Andreas Muschter, CEO of Commerz Real.

Meanwhile, the Kan Am Grund Group announced a doubling of the fund volume for the open-ended real estate fund “Leading Cities Invest” on Tuesday. He has collected around 250 million euros in new investor money.Scope predicts that the yield level of open-ended real estate funds will not change by leaps and bounds. In the medium term, “stable to slightly declining” returns are expected. The reasons for this: The potential through value appreciation is almost exhausted. In addition, newly purchased properties are acquired at high prices and thus at a comparatively low level of returns.