Property fund investment in Europe 2007

  • Publication Date:May 2007
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:66

Property fund investment in Europe 2007

Introduction

Datamonitor's Property Fund Investment in Europe 2007 report presents views on the market for property investment based on a survey of 100 leading asset managers across Europe. The report, which covers mass market, high net worth and institutional customer groups, forms part of a series looking at the market for alternative investments in Europe.

Scope

  • Draws on an extensive B2B study of asset managers across Europe to offer a unique perspective on property fund investments
  • Customer segments covered include mass market, high net worth and institutional clients
  • Countries studied are France, Germany, Italy, Spain and UK
  • Issues discussed include distribution, future expectations, key success factors, barriers to growth and attitudes towards new investment vehicles

Highlights

When asset managers from the five largest European markets were asked which geographic areas are of most interest to the investors in their home country, most selected Europe as the area that is most popular. They also believed that the majority of investors were looking to invest in mixed use funds rather than in a single property type.

When asked which sector the investors in their country preferred to invest in, 53.9% said that mixed use funds was the most popular strategy. The main appeal of a mixed use portfolio is the extra level of diversification it offers investors, as the different sectors of property are not necessarily closely linked in terms of performance.

There is a general trend towards favoring the dismantling of regulatory and tax barriers that exist in respect of onshore property funds, although far fewer asset managers believe that a corresponding increase in the regulations governing offshore funds would improve the onshore market.

Reasons to Purchase

  • Gain a unique picture of the market for property fund investments in Europe based on the views of Europe's premier asset managers
  • Understand the key success factors required to succeed in the market for property investments
  • Assess the potential for future growth in specific country/customer pairings based on the views of local asset managers themselves
  • Overview
  • Catalyst
  • Summary
  • Methodology
  • Executive Summary
    • Market context
    • Customer focus
    • Overview
    • Catalyst
    • Summary
    • Methodology
    • Executive Summary
    • Market context
    • Customer focus
    • Market Context
    • The European property fund investment landscape is diverse as tastes vary between markets and client groups
    • Growth in the European property fund market has increased steadily in recent years
    • A fee structure encompassing both management and performance is most suitable for property investment funds
    • Europe is the key property fund investment geography and mixed use funds are most favored by European investors
    • Regulation and tax regimes are driving the offshore property funds market's challenge to the onshore market
    • Outside of southern Europe, local players dominate the competitive landscape
    • Lack of interest will be the greatest barrier to higher take-up of property investments while demand is expected to increase
    • Data tables
    • Customer Focus
    • Property investment is most popular among institutional investors compared to other client segments
    • The advisory channel remains the primary distribution channel for property investments across Europe
    • Institutional clients will become the most important client segment in the property investment market
    • Data tables
  • Appendix
    • Definitions
    • Methodology
    • Further reading
    • Ask the analyst
    • Datamonitor consulting
    • Disclaimer
    • Figure 1: Real estate funds have seen steady growth since December 2004
    • Figure 2: A combined fee was judged by European asset managers to be the most appropriate for REITs
    • Figure 3: Italian asset managers had the most wide-ranging views on REIT fee structures
    • Figure 4: Almost two thirds of European asset managers felt that the combined fee option was best for open-ended property funds
    • Figure 5: German and Italian asset managers were less likely to feel that the combined fee structure was most appropriate for open-ended property funds
    • Figure 6: Over half of asset managers surveyed believed that the combined fee structure was best suited to closed-ended property funds
    • Figure 7: There was significant variation between different countries over the degree to which the combined fee structure was most appropriate for closed-ended property funds
    • Figure 8: European asset managers are confident that performance fees will become more widespread
    • Figure 9: The preference for investment in Europe among property fund investors is set to increase over the next two years
    • Figure 10: Investing in a mixture of commercial, retail and residential property was the most popular strategy among European investors
    • Figure 11: Both institutional and high net worth investors were fairly evenly split between defensive, opportunistic and mixed reasons for investing in property
    • Figure 12: Regulation is the most significant barrier to the development of the onshore property fund market
    • Figure 13: The majority of asset managers in each of the major European markets feel that onshore regulatory barriers hinder the development of onshore property investment
    • Figure 14: European asset managers generally feel that the regulators in their countries do not adequately support real estate investment development
    • Figure 15: Giving tax advantages to onshore property funds would do most to encourage the onshore property fund market
    • Figure 16: There is limited belief that onshore property investment will come to rival the development of the offshore market
    • Figure 17: The UK was marginally believed to be the most popular jurisdiction for the launch of new property funds
    • Figure 18: The UK property funds market will see a dramatic shift towards funds launched offshore in the next two years
    • Figure 19: European asset managers have mixed feelings about the potential of REITs to compete with corporate bond funds
    • Figure 20: Insufficient interest among potential clients and insufficient promotion of products are the biggest barriers to greater take-up of property investments among institutional clients
    • Figure 21: Asset managers expect the biggest increase in demand to come from wealthy clients seeking REITs, however the main customer group will continue to be institutional clients seeking property funds
    • Figure 22: There is no dominant property investment vehicle in Europe across all client groups
    • Figure 23: Mass market investors are most likely to access property investment via an independent financial advisor
    • Figure 24: The independent advice channel is the most popular in Europe for distributing property investments to high net worth clients
    • Figure 25: The direct sales channel is by far the most popular among European asset managers in terms of institutional investors
    • Figure 26: Over the next three years the institutional client base will become more important in the property funds market
    • Figure 27: Asset managers are generally positive about the year on year growth expected for property funds in the institutional market
    • Figure 28: A lack of interest among high net worth clients will stand in the way of property fund development in this client segment
    • Figure 29: Asset managers were cautiously optimistic about the future year on year growth in demand for property investment among high net worth clients
    • Figure 30: Low interest in property investment among mass market clients will do the most to hamper growth in take-up in the near future
    • Figure 31: A low year on year increase in demand for mass market property investment is most likely to occur
    • Table 1: Breakdown of Non-UCITS assets by category (excl. Ireland)
    • Table 2: Answers to the question: What is the most appropriate fee structure for REITs?
    • Table 3: Answers to the question: What is the most appropriate fee structure for an open-ended property fund?
    • Table 4: Answers to the question: What is the most appropriate fee structure for a closed-ended property fund?
    • Table 5: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that fees linked to the performance of property investments will become more common?
    • Table 6: All answers to the question: Thinking of property funds, which geographic sectors are most popular with investors in your country?
    • Table 7: All answers to the question: Thinking of property funds, which sector is currently most popular with investors in your country?
    • Table 8: All answers to the question: Do your institutional/high net worth clients get into the property investment market mainly for opportunistic or defensive reasons?
    • Table 9: All answers to the question: What is the most important barrier to the development of onshore property funds?
    • Table 10: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that onshore regulatory barriers hinder the development of property investments onshore?
    • Table 11: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that the regulators in my country haven't done enough to support the development of real estate investment trusts?
    • Table 12: All answers to the question: What will most encourage the development of the onshore property fund market?
    • Table 13: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that the onshore market will never develop to the extent that the offshore market is developed?
    • Table 14: All answers to the question: What is the most popular jurisdiction for the launch of property funds?
    • Table 15: All answers to the question: Where have/will most property funds in the UK be launched from in the last two years and in the next two years?
    • Table 16: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that real estate investment trusts have the potential to rival corporate bond funds?
    • Table 17: Three asset managers were considered to be the most prominent in the French property funds market
    • Table 18: Allianz Dresdner and Deutsche Bank are the key players in the German property funds market
    • Table 19: Only 11 asset managers were mentioned as players in the Italian property funds market
    • Table 20: Allianz Dresdner leads the way amongst Spanish asset managers in its development of property funds
    • Table 21: British asset managers named a wide range of competitors as being among the top property fund builders in the UK
    • Table 22: All answers to the question: Thinking of institutional investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 23: All answers to the question: Which is your biggest customer group for the following products?
    • Table 24: All answers to the question: In three years, which will be your biggest customer group for the following products?
    • Table 25: All answers to the question: For the following investments, from which customer base will the most increase in demand come from in three years' time?
    • Table 26: Answers to the question: Which is the largest client segment for the following types of property investments today?
    • Table 27: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to mass market investors?
    • Table 28: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to high net worth investors?
    • Table 29: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to institutional investors?
    • Table 30: All answers to the question: In three years, which will be your biggest customer group for property funds?
    • Table 31: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among institutional investors?
    • Table 32: All answers to the question: Thinking of high net worth investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 33: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among high net worth investors?
    • Table 34: All answers to the question: Thinking of mass market investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 35: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among mass market investors?
    • Market Context
    • The European property fund investment landscape is diverse as tastes vary between markets and client groups
    • Growth in the European property fund market has increased steadily in recent years
    • Although the German property fund market has suffered, asset managers are overwhelmingly confident of a recovery
    • A fee structure encompassing both management and performance is most suitable for property investment funds
    • Over 60% of European asset managers believe that REITs were most suited to a combined fee structure
    • The combination fee is the most popular fee structure for open-ended property funds in Europe
    • The combined fee is believed to be the most appropriate structure for closed-ended property funds among European asset managers
    • There are clear country-specific trends in preferences for fee structures in property funds
    • A performance based fee structure is expected to become more common in property investment
    • Europe is the key property fund investment geography and mixed use funds are most favored by European investors
    • Europe is the most popular geographic area for investment and will remain important over the next two years
    • The option of investing in mixed use funds is most appealing to investors
    • Institutional client investment in property funds is more defensive than HNW investment in the asset class
    • Regulation and tax regimes are driving the offshore property funds market's challenge to the onshore market
    • Regulation is the key barrier to onshore property fund development
    • In each of the major European markets, the majority of asset managers feel that onshore regulatory barriers hinder onshore property fund development
    • The majority of European asset managers believe their home regulators could be more helpful in assisting the development of real estate investment trusts
    • Dismantling tax and regulatory barriers is the key to encouraging the onshore property fund market in Europe
    • European asset managers do not believe that the onshore property investment market will offer the same range and complexity currently available offshore
    • The UK is currently the most popular jurisdiction for property fund launches
    • There will be a strong challenge to the dominance of onshore property funds in the UK market
    • European asset managers remain split on the potential of REITs to rival corporate bond funds
    • Outside of southern Europe, local players dominate the competitive landscape
    • French asset managers believe that ADi, AXA and Crdit Agricole are the top property fund developers in France
    • Deutsche Bank stands out in the German property fund market
    • The Italian property fund market has a limited range of players with very little seperating them
    • Allianz is considered to be the leading developer of property funds in the Spanish asset management market
    • There are a large number of significant competitors in the property fund market in the UK
    • Lack of interest will be the greatest barrier to higher take-up of property investments while demand is expected to increase
    • A lack of interest and poor promotion of funds among institutional clients will be the biggest barriers to wider take-up of property investments among this group
    • Data tables
    • Customer Focus
    • Property investment is most popular among institutional investors compared to other client segments
    • Institutional investors will still be the main force in the European property investment market in three years' time
    • Compared to other forms of alternative investment, property funds will see significantly increased demand from the retail client segment
    • Each customer base favors a different kind of property fund
    • The advisory channel remains the primary distribution channel for property investments across Europe
    • Property investments are most likely to be distributed to mass market investors through an independent financial advisor
    • Over one third of asset managers believe high net worth clients investing in property are best served by independent financial advisors
    • Distributing property funds directly to insitutional clients is seen as the most effective strategy for this client segment
    • Institutional clients will become the most important client segment in the property investment market
    • Asset managers believe that demand for property investments among institutional clients will increase by 5-10% per annum over the next three years
    • Low high net worth client interest in property investment is most likely to hold the market back
    • Demand for property investment is most likely to increase by between 0 and 5% per annum among high net worth clients
    • A lack of interest in investing in or promoting property investments is likely to prevent these products from becoming more popular among mass market clients
    • There will be a gentle increase in demand for property investments among mass market clients
    • Data tables
  • Appendix
    • Definitions
    • Property Fund
    • HNW
    • Mass affluent
    • Real estate investment trust (REIT)
    • Methodology
    • Further reading
    • Ask the analyst
    • Datamonitor consulting
    • Disclaimer
  • List Of Tables
    • Table 1: Breakdown of Non-UCITS assets by category (excl. Ireland)
    • Table 2: Answers to the question: What is the most appropriate fee structure for REITs?
    • Table 3: Answers to the question: What is the most appropriate fee structure for an open-ended property fund?
    • Table 4: Answers to the question: What is the most appropriate fee structure for a closed-ended property fund?
    • Table 5: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that fees linked to the performance of property investments will become more common?
    • Table 6: All answers to the question: Thinking of property funds, which geographic sectors are most popular with investors in your country?
    • Table 7: All answers to the question: Thinking of property funds, which sector is currently most popular with investors in your country?
    • Table 8: All answers to the question: Do your institutional/high net worth clients get into the property investment market mainly for opportunistic or defensive reasons?
    • Table 9: All answers to the question: What is the most important barrier to the development of onshore property funds?
    • Table 10: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that onshore regulatory barriers hinder the development of property investments onshore?
    • Table 11: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that the regulators in my country haven't done enough to support the development of real estate investment trusts?
    • Table 12: All answers to the question: What will most encourage the development of the onshore property fund market?
    • Table 13: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that the onshore market will never develop to the extent that the offshore market is developed?
    • Table 14: All answers to the question: What is the most popular jurisdiction for the launch of property funds?
    • Table 15: All answers to the question: Where have/will most property funds in the UK be launched from in the last two years and in the next two years?
    • Table 16: All answers to the question: In your understanding or experience of the property investment market, to what extent do you agree or disagree with the statement that real estate investment trusts have the potential to rival corporate bond funds?
    • Table 17: Three asset managers were considered to be the most prominent in the French property funds market
    • Table 18: Allianz Dresdner and Deutsche Bank are the key players in the German property funds market
    • Table 19: Only 11 asset managers were mentioned as players in the Italian property funds market
    • Table 20: Allianz Dresdner leads the way amongst Spanish asset managers in its development of property funds
    • Table 21: British asset managers named a wide range of competitors as being among the top property fund builders in the UK
    • Table 22: All answers to the question: Thinking of institutional investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 23: All answers to the question: Which is your biggest customer group for the following products?
    • Table 24: All answers to the question: In three years, which will be your biggest customer group for the following products?
    • Table 25: All answers to the question: For the following investments, from which customer base will the most increase in demand come from in three years' time?
    • Table 26: Answers to the question: Which is the largest client segment for the following types of property investments today?
    • Table 27: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to mass market investors?
    • Table 28: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to high net worth investors?
    • Table 29: All answers to the question: What do you think is the best way for the following alternative investments to be distributed to institutional investors?
    • Table 30: All answers to the question: In three years, which will be your biggest customer group for property funds?
    • Table 31: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among institutional investors?
    • Table 32: All answers to the question: Thinking of high net worth investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 33: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among high net worth investors?
    • Table 34: All answers to the question: Thinking of mass market investors, what do you think will be the major barriers to wider take-up of alternative investments in the next three years?
    • Table 35: All answers to the question: Thinking of the next three years, how do you think demand for alternative investments will change among mass market investors?
  • List Of Figures
    • Figure 1: Real estate funds have seen steady growth since December 2004
    • Figure 2: A combined fee was judged by European asset managers to be the most appropriate for REITs
    • Figure 3: Italian asset managers had the most wide-ranging views on REIT fee structures
    • Figure 4: Almost two thirds of European asset managers felt that the combined fee option was best for open-ended property funds
    • Figure 5: German and Italian asset managers were less likely to feel that the combined fee structure was most appropriate for open-ended property funds
    • Figure 6: Over half of asset managers surveyed believed that the combined fee structure was best suited to closed-ended property funds
    • Figure 7: There was significant variation between different countries over the degree to which the combined fee structure was most appropriate for closed-ended property funds
    • Figure 8: European asset managers are confident that performance fees will become more widespread
    • Figure 9: The preference for investment in Europe among property fund investors is set to increase over the next two years
    • Figure 10: Investing in a mixture of commercial, retail and residential property was the most popular strategy among European investors
    • Figure 11: Both institutional and high net worth investors were fairly evenly split between defensive, opportunistic and mixed reasons for investing in property
    • Figure 12: Regulation is the most significant barrier to the development of the onshore property fund market
    • Figure 13: The majority of asset managers in each of the major European markets feel that onshore regulatory barriers hinder the development of onshore property investment
    • Figure 14: European asset managers generally feel that the regulators in their countries do not adequately support real estate investment development
    • Figure 15: Giving tax advantages to onshore property funds would do most to encourage the onshore property fund market
    • Figure 16: There is limited belief that onshore property investment will come to rival the development of the offshore market
    • Figure 17: The UK was marginally believed to be the most popular jurisdiction for the launch of new property funds
    • Figure 18: The UK property funds market will see a dramatic shift towards funds launched offshore in the next two years
    • Figure 19: European asset managers have mixed feelings about the potential of REITs to compete with corporate bond funds
    • Figure 20: Insufficient interest among potential clients and insufficient promotion of products are the biggest barriers to greater take-up of property investments among institutional clients
    • Figure 21: Asset managers expect the biggest increase in demand to come from wealthy clients seeking REITs, however the main customer group will continue to be institutional clients seeking property funds
    • Figure 22: There is no dominant property investment vehicle in Europe across all client groups
    • Figure 23: Mass market investors are most likely to access property investment via an independent financial advisor
    • Figure 24: The independent advice channel is the most popular in Europe for distributing property investments to high net worth clients
    • Figure 25: The direct sales channel is by far the most popular among European asset managers in terms of institutional investors
    • Figure 26: Over the next three years the institutional client base will become more important in the property funds market
    • Figure 27: Asset managers are generally positive about the year on year growth expected for property funds in the institutional market
    • Figure 28: A lack of interest among high net worth clients will stand in the way of property fund development in this client segment
    • Figure 29: Asset managers were cautiously optimistic about the future year on year growth in demand for property investment among high net worth clients
    • Figure 30: Low interest in property investment among mass market clients will do the most to hamper growth in take-up in the near future
    • Figure 31: A low year on year increase in demand for mass market property investment is most likely to occur
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