US-geared products strong among German property funds

German institutional investors have 264 real estate funds available for subscription, mainly focused on Germany and Europe according to research by property consultancy Wüest Partner Deutschland.

The firm said the “surprisingly high number” of available funds includes 63 funds that focus on Germany and 58 on Europe. A further 15 products have a UK theme but 50 funds concentrate on the US.

“The high number of US products available for subscription is explained by the many equity investment options involving evergreen funds as well as smaller equity investment programmes,” said Wüest Partner Deutschland director and head of investment consulting Stefan Stute.

Stefan Stute.

Funds focused on the German market also tend to specialise in particular sectors. There were 51 purely residential funds compared to 27 that concentrate on offices, and 19 each focused on logistics and retail. Five funds focused on hotels. Funds active outside Germany tend to be more diversified, the report states.

The average IRR targets for returns are 4.3% and 5.2% for German and European residential property respectively, 6.7% for both offices and logistics, and 7% for diversified products.