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German property funds show resilience during crisis

property_covidOpen-ended property funds in Germany have remained resilient throughout the coronavirus crisis, new research shows.

Strategies received new cash to the tune of €1.3 billion throughout March, April and May – the peak months of the virus.

Despite inflows dropping off during the crisis, they remain positive, according to a report by Hamburg-based real estate specialist Intreal that cites Bundesbank figures.

At the height of the crisis in April, open-ended real estate funds’ net assets still surpassed €110 billion.

Michael Schneider, managing director of Intreal, said: “Open-ended mutual property funds are proving highly resistant to the coronavirus crisis.

“We are a long way removed from the sort of scenarios we saw after the 2009 financial crisis, when huge sums were withdrawn from funds over a short space of time, and the vehicles faced severe liquidity problems.”

The report highlights differences within open-ended property funds. Residential currently accounts for 2.0% and logistics for 4.2% of properties in all open-ended property funds. The situation is mixed for food and retail, the second-most important type of use at 25.3%.

At around 54% on average, the most important type of use for open-ended property funds is the office segment, where the split between core and non-core is likely to widen again, the study states.

“As open-ended property funds typically follow a core strategy, I expect to see a stable performance from office properties – provided that their tenants do not predominantly operate in industries that have been badly affected by the crisis,” Schneider said.

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