Germans shopping for Gulf real estate

German institutional investors like going to buying real estate in third countries. According to report in the German newspaper Die Welt, Feri Institutional Management has surveyed 232 German institutional investors with a total portfolio value of around one billion Euro.

Currently only 4.9% are invested in real estate; while 77% are in debt instruments and 9.3% in stocks. The share in real estate will be increased, the survey interviews suggest, by 0.7% to 5.6%.

Currently the German institutions in this survey are 63.4% invested in German real estate but are planning to diversify their portfolio internationally.

This leads to foreign planned investments worth seven billion Euro for the next two years alone. The main focus will be Europe (29.8% to increase to 36.3%), the United States (5.8% to 7.6%). The rest of the world will surge from 1% to 3.6%.

Besides Europe and the USA, German buyers like China but the Middle East is now also under discussion. The largest reinsurance company in the world, Munich Re, visited Bahrain recently to look at investment opportunities and also the UAE.

Munich Re is looking for some exposure in the Gulf markets where they do not hold any properties yet. It sees the markets in some parts quite highly priced but would like to look at commercial and office properties for their Asian portfolio.

German institutions are going to manage real estate like stock portfolios: diversifying risks by international investments.

Their Swiss counterparts still have less than 2% abroad. The strategy is so far quite similar to their Arab clients who are now looking at European properties for diversification of currencies, assets and political risk.

Actually this will lead to some decent deals between Arab and German investors. Arabs would like to increase their share in Germany, France and Spain while German investors would like to take their share in US properties.

Active buying and selling is becoming more and more common for real estate investors to optimise their exposure to a variety of risks and to take benefit of the chances. Real Estate needs always local expertise. However the portfolios are moving clearly internationally.