According to Isabella Chacón Trodl, CEO of BNP Paribas REIM Germany, German institutional investors are expected to become more global, ESG-focused and impact-focused in the coming years.
Chacon Treudl, who is also part of BNP Paribas REIM’s European Executive Board, said German institutional real estate investors who already invest domestically are increasingly looking to invest across the continent and in Asia. said.
“Japan, and the Tokyo area in particular, is seen as an attractive location for German institutional investors due to its size, security and transparency,” he told IPE Real Asset at the Expo Real trade fair in Munich. “I’m doing it,” he said.
Chacón Trodl’s view confirms research published last week by Universal Investment, which found that German institutional investors are reducing their overall weight on the domestic market and redeploying capital primarily to Asia-Pacific and North American markets. It was indicated that the plan is to allocate the amount.
The survey of investors with more than €55 billion in real estate holdings found that the average allocation to Asia Pacific will more than double to 8% from the current 3%, while allocation to North America will increase from 5%. is expected to rise. Up to 9%.
Meanwhile, the allocation to Germany is expected to fall to 57% from the current 69%, while the average weighting to other European markets is expected to rise from 23% to 26%, according to the study.
In the long term, Chacón Trodl believes that ESG funds will become mainstream, especially in Germany, where there is a clear appetite for investing in housing due to the scarcity.
He said construction costs were already falling and this was likely to lead to increased investment in residential real estate in Germany.
“Construction costs are expected to contract in the near to medium term as financing conditions are expected to ease in the future,” he said, adding that energy costs are coming down to previous levels. Ta.
Chacón Trodol said immigrants could also help alleviate labor shortages at construction sites. Additional new construction and renovation methods, such as continuous and modular approaches, may help reduce costs.
Investors are also looking for opportunities in megatrends such as the lifestyle sector, Chacón Trodl said. He said megatrends ensure a more long-term, demand-driven investment strategy.
“Megatrends will shape our future demand. Demographics, lifestyle changes and digitalization will drive the demand for accessible apartments for seniors, housing assets for seniors, housing for families or for singles. There will be entirely new real estate offers and approaches developed in the affordable housing sector, such as solutions.
He said that although Article 9 strategies based on the EU’s Sustainable Finance Disclosure Regulation are new and few in number at the moment, the focus for German investors in the coming years will be on developing impactful strategies. Stated.
Since most of Germany’s system capital is pension funds, the system has an appetite for influence, which will be reflected in its investments, he said.
According to Chacón Troidl, BNP Paribas REIM Germany’s top priorities are finding the right risk-adjusted return balance, working with the existing portfolio to address ESG topics, CO2 reduction and active asset management. and improving energy efficiency through technology.
She said the manager was one of the pioneers in setting up Europe’s first fund in line with the Paris Climate Agreement.
In addition to the European Real Estate Impact Fund, the administrator launched the Pierre Impact Foundation late last year with the aim of facilitating access to social infrastructure such as housing and schools for the general public, including young professionals, students and the elderly. A fund has also been launched.
Click here to read the latest edition of the latest IPE Real Assets magazine.