In the low-interest phase, they were considered a tip for investors who wanted to invest in concrete gold but didn't have enough assets to buy their own real estate: open-ended real estate funds that invest in high-rise office buildings, shopping centers and apartments.

But now interest rates are rising.

On the one hand, this means that financing becomes more expensive, which slows down demand.

On the other hand, other forms of investment are becoming relatively more attractive, and that slows down the inflow of funds.

Both are disadvantageous for open-ended real estate funds.

Christian Siedenbiedel

Editor in Business.

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An advantage for them, on the other hand, is that they can invest free funds at higher interest rates.

Inflation also seems to be making it easier to raise rents.

In any case, several fund companies report that for the majority of the properties in their funds there are either inflation-linked rents, which automatically increase with inflation, or graduated rents.

Apparently, some attempts are being made to rent out new properties with indexed rents.

Another advantage is that the properties in the fund are valued quarterly by independent appraisers.

They tend to be more cautious, which is why falling real estate prices are at least not immediately reflected in the fund as valuation discounts.

On the other hand, it still seems unclear to what extent the trend towards working from home will weigh on funds with office properties.

2 to 2.5 percent return expected

In any case, the fund rating agency Scope expects an average yield of 2 to 2.5 percent for open-ended real estate funds this year.

That is less than in previous years and no longer far from the yield on the ten-year Bund, which was recently just over 2 percent.

In return, the volatility is lower.

When asked, Scope analyst Sonja Knorr said: "We assume that falling real estate valuations will weigh on fund returns." Representatives of various real estate funds also spoke of a "challenging environment" at a press conference held by the consulting firm Rueckerconsult on Tuesday.

The fund managers are of course trying to defy these conditions - and also see opportunities in the development, for example for purchases when prices are falling.

"The turnaround in interest rates has an impact on all usage classes, but the effects are different," said Arnaud Ahlborn from the capital management company Industria.

Ulrich Steinmetz from DWS Grundbesitz emphasized the importance of the rental market: "This is cushioning the consequences of the tense economic and geopolitical environment - we expect rising rents across all types of use, most strongly in the residential and logistics segments."

Steinmetz believes that the price correction is already behind logistics properties in particular – there are now opportunities there again.

Among commercial real estate, the industry has discovered a category that is now considered “resilient” rather than crisis-proof: spaces for retail, local supply – everything where there is “bread, butter and milk”, as Michael Kohl from the capital management company says formulated by KGAL.

These were the shops that were allowed to open despite everything during the Corona lockdown, and they are still the ones where the trend towards online trading is leaving “less drag marks” – i.e. don’t invest in the department store in the pedestrian zone, but in Rewe or Edeka in the district, maybe also in the premises of the drugstore dm.

All shops in which there are things of daily use that are still bought even in times of smaller budgets.

The inflows into open-ended real estate funds from January to November last year were around 30 percent below the same period of the previous year at EUR 4.7 billion.

Michael Schneider, managing director of the company Intreal and board member of the industry association BVI, said that for the current year one must also assume declining inflows of funds in view of inflation-weakened investors.

For the first few weeks of the new year, however, Ahlborn from Industria reported higher inflows and falling return requests.

Scope expert Knorr said that there are currently no unusually high returns of shares or terminations: "The rules on minimum holding and notice periods introduced in 2013 have a stabilizing effect here."