Institutional investors more active in real estate

28/02/2005 10:00

Investments by pension funds, insurance and investment companies in real estate increased by 2.1 billion euro in 2003 reaching 90 billion euro.

Real estate investments by institutional investors

Real estate investments by institutional investors

From direct to indirect real estate

Investments in direct real estate, such as land, dwellings, offices and shops increased from 60.6 to 60.9 billion euro in 2003. The increase followed a substantial decrease in 2002, when several investment companies were taken over by foreign companies.

The volume of indirect real estate, that is shares in real estate investment companies, increased from 27.3 to 29.1 billion euro in 2003. Pension funds invest relatively large amounts in indirect real estate. Their ownership in indirect real estate increased from 22.8 to 24.4 billion euro in 2003.

In real estate investments the accent has been shifting from direct to indirect real estate for years. The share of indirect real estate investments has increased from 4 percent in 1980 to 32 percent in 2003.

Buying and selling direct real estate, institutional investors

Buying and selling direct real estate, institutional investors

Sizeable purchases and sales

Purchases and sales of direct real estate are at a historic high. Especially the purchases in 2000 of 14.0 billion euro and the sales in 2002 of 16.1 billion euro catch the eye. They have to do with several large transactions by investment companies.

Research shows that pension funds and insurance companies have positive expectations about the share of direct real estate in their portfolio. This should lead to large purchases in the years to come.

Investments in direct real estate, institutional investors

Investments in direct real estate, institutional investors

Three-quarters of direct real estate domestically oriented

Three-quarters of investments by institutional investors in direct real estate are domestically oriented. The domestic focus of pension funds and insurance companies is even greater, whereas investment companies have more foreign direct real estate. Domestic real estate mainly consists of dwellings, offices and shops.

Investments in indirect real estate, institutional investors

Investments in indirect real estate, institutional investors

Indirect real estate largely foreign

A significant part of indirect real estate consists of investments in foreign real estate investment companies. Over the last three years the foreign share of total indirect real estate has been stable at 60 percent.

The interests in Dutch real estate investment companies also have an international character. Some 63 percent of total real estate of Dutch real estate investment companies in 2003 was foreign real estate.

John Gebraad