- Survey undertaken among 222 members of PATRIZIA’s institutional client base
- 72% of respondents planning to increase real estate investments in the next five years with a focus on portfolio diversification
- 9 out of 10 preparing for growing regulatory requirements and greater focus on ESG and risk reporting
- Digitally automated portfolio analysis and reporting are key to meet growing reporting requirements, say more than 80% of clients
Augsburg, 26 March 2021. PATRIZIA, a leading partner for global real assets, today unveils the key findings of a survey of 222 members of its institutional client base. According to the research, 72% of institutional investors plan to expand their real estate portfolios over the next five years. 16% of respondents said they intended to expand their real estate portfolios by more than 10% over the next five years, while 56% intend to grow their real estate portfolios by up to 10%.
28% expect to keep their weighting in real estate constant, with none of the respondents intending to divest from the asset class. The results reflect the sustained and growing appeal of real assets against a macro-economic environment of ultra-low interest rates and fixed income yields.
The survey shows that during the Covid-19 pandemic, real estate proved to be a stable investment with 56% of investors reporting no adjustment to their real estate portfolios. Of those who did reallocate in response to the crisis, most adjusted exposure across real estate sectors (19%), while others shifted towards lower risk strategies (8%), or deferred investments (17%) and increased their liquidity (6%). 14% turned to equities, bonds, other asset classes or infrastructure.
Faced with growing regulatory requirements and increasing importance of risk reporting, 79% of investors see digital services as an important differentiator for real estate investment managers in the future.
Anne Kavanagh, Management Board Member and Chief Investment Officer at PATRIZIA, commented:“Institutional investors are increasing their investments in real estate and they look for broader diversification across real estate sectors to ensure attractive risk-adjusted returns in the future. In the current ‘lower for longer’ interest rate environment, cash returns from real estate have proved to be an invaluable source of attractive and stable returns. Overall, real estate investments were remarkably resilient in the Covid pandemic and delivered solid returns. At the same time, the pandemic underlined the need for active management of property assets and tailored sector strategies to effectively reduce risks and drive value, which PATRIZIA’s platform is exceptionally well geared towards.”
Portfolio diversification expected to be a key objective
The trend towards broader diversification is reflected in how investors plan to adjust their portfolios over the next five years. About every second respondent plans to grow their infrastructure exposure and 42% intend to invest in new asset classes, while 43% will further diversify their portfolios across different real estate segments, investment strategies (12%) or international markets (12%).
Digital automation integral to meeting increasing regulatory demands
97% of respondents expect regulatory requirements for reporting to increase over the next five years. 92% believe risk reporting to become more comprehensive. The growing requirements include higher expectations for reporting by segments (40%), market benchmarking (42%), performance (48%) and investment reporting (60%). A significant majority are preparing for increased ESG reporting at both a portfolio and individual property level (87% and 77% respectively). As a result, 73% plan to increase ESG related figures and indicators used for their portfolio analyses and reporting.
Faced with the growing requirements, institutional investors believe developments towards automated portfolio analyses and reporting will accelerate. 94% expect automated reporting to become more important, with 34% of investors stating its importance will increase strongly. 84% believe automated analyses at portfolio level will grow in importance. At the same time, investors are less decisive about the application of Artificial Intelligence (AI) in portfolio analyses. 55% say that the use of AI will increase in the next five years, but only 7% believe in a strong increase.
Alexander Betz, Management Board Member and Chief Digitalisation Officer (CDO) at PATRIZIA, said: “The majority of our clients see digital services as a key differentiator for real estate investment managers. They are increasingly convinced that automation and digital services will lead to greater transparency, more efficient investment management and, ultimately, better investment decisions. PATRIZIA has significantly invested in digitalising all of its processes and innovation is a focus for us in providing solutions to maximise the use of data available to us. Our investors can directly monitor the performance of their investments any time while our data analytics supports their investment decisions.”
The survey was conducted between 2 and 23 February 2021 via myPATRIZIA, PATRIZIA’s proprietary online portal for its more than 450 institutional clients.
myPATRIZIA – the growing portal for PATRIZIA investors
As part of its digitalisation strategy, PATRIZIA launched its investor portal myPATRIZIAaimed at its institutional clients in June 2020 and is gradually transferring all its fund data, reporting, and clients to the portal. Today, already more than 1,700 individuals from PATRIZIA’s institutional clients and more than 5,000 semi-professional and retail clients are connected to the portal, for which PATRIZIA continuously improves services, features, and provided information. More than 70% of investors in the survey rated the design and navigation of myPATRIZIA as good or very good, with about 90% of the survey participants using the portal at least once per month.
PATRIZIA: A leading partner for global real assets
As a company with operations around the world, PATRIZIA has been offering investment opportunities in real estate and infrastructure assets for institutional, semi-professional and private investors for 37 years. PATRIZIA manages more than EUR 47 billion in assets and employs over 800 professionals at 24 locations worldwide. Through its PATRIZIA Foundation, the company is committed to social responsibility. The Foundation has helped over 230,000 children in need worldwide gain access to education and thus, has given them the chance of a better life over the last 21 years. You can find further information at www.patrizia.ag
Phone: +49 821 50910 628