Frankfurt am Main / Shanghai, October 8 2019
"Buying 1,000 properties worldwide in around eight years together with institutional investors and asset managers is a tremendous growth story that underscores the quality of our offering and the high level of trust that customers place in us. The very positive development of our real estate business represents an imporant milestone for us on our way to becoming the largest European fund service platform for all asset classes. We will continue making significant investments in specialists, IT and new locations to achieve this," said Michael Reinhard, CEO of Universal-Investment.
Fund service platform reaches further milestone with acquisition of Yi Fang Towers
Gross fund volume grows to over 22 billion euros
Asia emerging as important growth market
Since breaking into this segment, Universal-Investment as a fund service platform has launched 45 special funds for institutional investors, such as pension funds or insurance companies as well as fund initiators, and has teamed up with 35 real estate asset managers searching worldwide for the best properties. This is also reflected in figures: In 2019, more than one third of all real estate purchases for funds on the platform were made in Asia. Therefore an office is to be opened in Asia soon in order to build up local capacities and expertise.
Universal-Investment creates the appropriate structures for clients to enable them to invest efficiently and flexibly. At the same time, the company provides support in meeting all necessary legal requirements and helps to create transparency through state-of-the-art reporting. To further automate real estate administration, the company is also investing in enhanced IT systems and data analytics to further expand its range of services for customers.
One reason for the real estate segment’s strong growth is the changing behaviour of investors. In response to the persistently low interest rates, they are investing more in alternative asset classes, such as real estate, with which adequate returns can still be generated. Since the product division was founded in 2011, the gross volume of administered real estate funds has grown from an initial 1.1 billion euros to over 22 billion euros.
The second growth catalyst is the German Master KVG concept from the securities sector which has now been established in the real estate sector. In the early 1990s, Universal-Investment pioneered the approach of separating portfolio management and administration in the securities sector; today, around 60 percent of securities special funds in Germany follow this principle. In 2011, Universal-Investment was one of the first investment management companies to apply the Master KVG concept to the real estate sector. At the moment, every fourth euro invested in German real estate special funds is managed according to the Master-KVG principle, and the trend continues to rise. Within just a few years, Universal-Investment has risen to third place on the league table of the largest providers of real estate special funds in Germany. "With the Master KVG concept, we create efficiency, transparency and flexibility for our clients - for all asset classes. Our experts at our locations in Germany and Luxembourg also enable customized solutions to be created for every investor," Reinhard continued.
A close look at the asset allocation also reveals some clear developments. An analysis of the real estate capital invested on the Universal-Investment platform shows that demand for North American real estate has been continuously rising since 2014, while now investors regard the price level as no longer tenable and have therefore recently lowered their exposures. In contrast, the Asian markets have become more attractive. "China in particular is gaining in importance because broadly diversified investors are no longer able to capture the expected returns in saturated markets and are evidently prepared to take higher risks," explains Marcos Joos, Head of Real Estate Investment Management. "Our current real estate investor survey shows that the price level in Europe, especially in core locations, is increasingly no longer regarded as acceptable. This is another reason why, with 9 percent of all respondents, far more real estate investors are considering Asia than in the past," added Joos.
Changes at sector level can also be seen. The share of retail and catering in real estate investments on the platform has been falling constantly for years, most recently to 33.1 percent. In 2016, 44.2 percent were still invested in this class. Instead, more and more is being invested in office space and apartments, especially in niche segments such as micro living or student residences.