Institutional investors in Germany are holding firm on their infrastructure allocations but are showing an increasingly differentiated view of the real estate market. This is evident from the latest INTREAL investor survey, which polled 48 German institutional investors, including banks, family offices, pension funds, savings banks, foundations, insurance companies, and professional pension schemes. The study, “Which Real Asset (Funds) will impress in 2027?”, establishes geographical priorities in established European markets and analyses preferences in real estate, infrastructure, and private debt.
Continuity and Specificity in Infrastructure Investments
Around 67 per cent of the investors surveyed intend to keep their existing infrastructure allocation constant until 2027, while almost 30 per cent plan to increase it. Only three per cent aim for a reduction. Andreas Ertle, Managing Director at INTREAL, highlights that infrastructure has become a permanent component of many investment portfolios. Investors are increasingly concentrating on specific infrastructure segments and markets to allocate capital precisely and align investment concepts with return targets. There is particular demand for long-term sustainable investments with convincing return profiles.
Within the infrastructure segments, renewable energies and digital infrastructure, including data centres and communication, are equally favoured by investors at approximately 62 per cent each. Utility infrastructure is rated as attractive by 42 per cent of respondents, while the transport and traffic segment saw an increase of ten percentage points compared to the previous year, reaching 38 per cent. Regionally, investors prefer European markets; approximately 85 per cent name Europe as an investment target, 59 per cent Germany. The USA plays a subordinate role at about seven per cent. Regarding investment vehicles, funds lead with 64 per cent, followed by private equity funds (36 per cent) and infrastructure debt funds (32 per cent).
Shift in Preferences within the Real Estate Segment
In the real estate segment, there are clear changes in preferences. Logistics properties, at 59 per cent, are ranked first for the most attractive property type for the first time, closely followed by residential properties at 56 per cent. The hotels and serviced apartments segment saw a significant increase in interest, rising from seven to 22 per cent. Local retail properties are mentioned by 29 per cent of respondents. Jan Ferdinand, Executive Director Sales at INTREAL, interprets this as a significantly more selective approach to the real estate market, where investors differentiate more strongly according to property types that prove compelling under current market conditions.
- —More selective approach to the real estate market
- —Logistics properties lead for the first time with 59 per cent attractiveness
- —Significantly increased interest in hotels and serviced apartments
- —Preference for established European markets in real estate
The increased selectivity is also reflected in planned real estate allocations: 56 per cent of investors plan to reduce their quota by 2027, while 29 per cent intend to maintain a constant allocation, and 15 per cent plan an increase. Return expectations have shifted upwards; approximately 27 per cent of respondents expect an initial distribution yield of over five per cent for new real estate funds. The largest group, around 34 per cent, expects 4.1 to 4.5 per cent, while the expectation of a return of 3.5 to 4.0 per cent has fallen from 40 per cent in the previous year to now twelve per cent.
For real estate, the focus is also on established European markets; 70 per cent name Europe as an investment destination, 68 per cent Germany. The USA plays a marginal role at three per cent. Within Europe, the DACH region leads with 83 per cent, followed by Benelux, which has significantly gained attractiveness with 61 per cent (previous year 40 per cent). Scandinavia reaches 43 per cent. Despite this differentiation, 68 per cent of investors see potential price and value declines as the biggest challenge for the real estate investment market in 2027. Further challenges include high price levels or low initial yields (55 per cent) and the availability of financing (40 per cent). Interest rates, economic development, and economic policy are cited as primary influencing factors.
