When asked Susanne Eickermann-Riepe, Team Leader Real Estate at PwC, a paradigm shift took place regarding the well-known mantra of the real estate market. What used to be “location, location, location” is now “liquidity, liquidity, liquidity”.
Summary of the results of the Reax web conference
According to market players, considerable growth in the secondary market for fund shares of institutional real estate investments can be expected this year. The market volume is expected to increase from the current two billion euros to at least three to five billion euros. The transaction volume, which has collapsed due to the consequences of the corona crisis, is also expected to recover from Q3 – both on the primary and the secondary market. The core real estate segment is one of the profiteers of the economy. The positive effects on the secondary market result from an increase in the liquidity requirements of many institutional investors. However, independent intermediaries are required to address the valuation problem relating to fund shares. These results come from a web conference that the Hamburg-based real estate investment firm Real Exchange (Reax) initiated. A total of nine experts from the institutional real estate investment sector took part.
This is what the experts say in detail
In one assumption there was cross-expert agreement, it says in the press release of the consulting company: The German secondary market is currently still very underdeveloped, but will show considerable growth in the near future. Thomas Gsaenger, Senior Portfolio Manager at Helaba Invest, comments as follows: “While the secondary market is flourishing in the United States and Great Britain, it is lagging behind in Germany. The current crisis offers numerous investment opportunities, but many transactions do not materialize because buyers and sellers cannot agree on the valuation. ”Konstantin Hähndel, Head of Real Estate Swiss Life Asset Management Germany, underpins this assessment by saying adds: “For fund shares, the net asset value (NAV) does not provide a basis for a fair valuation. The structure of the price determination for a fund unit corresponds more to a balance sheet valuation, which in addition to the property value also includes the previous fund history and accounting. This requires in-depth expertise in the areas of accounting and value development. Assessment standards are urgently needed here, but can only be expected in the next two to three years. “
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Stefan Stute, Head of Investment Consulting at Wüest Partner, says about the investment expenditure: “Due to numerous subjective factors, for example expectations regarding future cash flow or planned CAPEX measures, a future-oriented assessment of the current NAV is hardly possible without intensive analysis. The fact that the assessments of the NAV among market participants differ can be seen very well in listed real estate investments, where shares are also traded at discounts or premiums at the current NAV. If no own resources, processes or instruments are available for the necessary NAV analyzes on the investor side, external transaction advisors could support. ”Jochen Schenk, CEO of Real IS, adds:“ Last but not least, we expect shifts in the real estate portfolios in order to to be able to comply with the statutory investment limits again. The secondary market is particularly suitable here. The worst option is clearly the return of the share to the fund manager: long transaction periods of up to ten months combine with the loss of investor control over his own fund investment. ”
Liquidity instead of location
According to the experts, one cannot speak of a standstill when it comes to activities on the transaction market. However, there are restrictions on the types of use. Olaf Kretke, Head of Alternative Investments at Deka Immobilien, says: “We have focused our transactions on the areas of logistics, housing and food retailing. Due to the current situation, we prefer blind pool funds in order to be able to benefit from cheaper purchase prices if market prices fall. ”In addition, Susanne Eickermann-Riepe, Team Leader Real Estate at PwC, comments as follows:“ The mantra, location, Location, location ‘now means’ liquidity, liquidity, liquidity’. This, coupled with the increasing importance of the ESG criteria, will lead to the blossoming of new fund products and services – not least on the secondary market. ”
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