October 2008 VOL. 2

Foreign Exchange

Institutional investors in European real estate continue to remain committed to increasing their allocations to the asset class, despite the downturn in the market, according to a survey conducted by INREV, the European association for investors in unlisted real estate vehicles.
 
Over 70 percent of the institutional investors who responded to the survey say they intend to increase their allocation to real estate in the medium term, mainly through non-listed vehicles, but also listed property companies.
 
Investors’ continuing confidence in real estate suggests that the challenging market conditions are perceived as a general phenomenon across investment markets stemming from the financial market crisis. This can also be derived from the survey results where 70 percent of the institutional investors indicate that the case for real estate in comparison to other asset classes had remained the same over the past year, while 20 percent even felt that the case for real estate had improved.
 
“I think this indicates that the long-term trend of increasing institutional allocations to real estate is still intact despite the impact of the credit crunch, although the survey also shows evidence of technical changes in investment strategy in the short term in the current difficult market,” says Marie-Claude Gleize, director for non-listed real estate funds and active property investments for French investor Caisse des Dépots.