Denominator Effect Reverses

MUNICH-International realtor Cushman & Wakefield said the second half of 2009 is set to see a turnaround in indirect investment flows by institutions as the “denominator effect”–cutting real estate exposure to balance-mixed portfolios against other asset classes–reverses.

“While many institutional investors used the first half of the year in particular for the strategic realignment of their portfolios in view of the global economic crisis and, as a result, made negligible investments in indirect real estate assets, there are increasing signs that we are about to enter a renewed phase of investment,” says Martin Braun, head of C&W’s capital markets group in Germany. Last year saw a 60% drop in institutional investment volumes in indirect property, but over the past few months, many have expanded holdings as a result of the disproportionate devaluation of stocks and commodity portfolios, now slightly recovered.