Is it time to take risks or to play safe?

According to a survey by fund manager Union Investment, 52% of real estate investors in Germany, France and Britain are afraid of not achieving their targets for yields over the next three years, so many are trying to balance daring against caution. In Germany about 40% are for daring and another 40% for caution.

 84% of UK investors and 54% of French investors are currently focussing on yields, the latter being an 8% rise over the figures in January and the biggest jump in the three regions. All in all, 60% of 161 investors are focussing on yields, 29% on security and 9% on liquidity. In January the number focussing on yields was only 55% and a year ago 52%.

Only about a third of the companies surveyed (35%) are willing to risk more for the same yield.  Country by country, the willingness to do so, to compensate for instance for the burden of falling initial yields, is 46% in France, 32% in the UK and 28% in Germany.

Investors willing to aim lower

The willingness to risk more for less yield is 60% in the UK, 56% in Germany and 52% in France. ‘A trend towards riskier investment is still not perceptible on the whole,’ says Olaf Janßon, the head of real estate research at Union Investment. The survey also confirms that the risk of liquidity has become a greater concern in every fourth company, irrespective of the region. Indeed 42% of the companies surveyed are focussing more on liquidity management than they did three years ago, especially in France, where the figure is above 50%.

The climate for investing in real estate in the three biggest European economies varies from region to region. The downturn in France may have reached its limit, whereas in Germany and the UK there are drops of 2.4 and 4.0 points respectively.

The survey was completed at the end of June before the Brexit referendum, so even before the decision to leave the union, the confidence of British investors (currently at 64.3 points on the national index) was at its lowest since 2012. For the first time since 2010, the level of confidence in the UK is less than in Germany (67.5%) and France (67.0%).