The real estate share of German insurers reaches a maximum of 12.1 percent. Compared to the previous year, it has grown by 0.6 percent, although companies are reacting with some hesitation due to the current environment. Currently, only half want to further increase their share of real estate: last year it was still two-thirds of the participants and five percent even want to reduce their share of real estate. The 13-year upward trend in real estate insurance premiums seems to be weakening.
These and the following results come from this year’s EY “Trendbarometer Real Estate Investments in Insurance.” In May 2022, a survey was conducted among 30 leading companies in the local insurance industry. Various players in the insurance industry participated in the survey, such as pension funds and reinsurance and life companies.
“Insurance companies are currently very hesitant in the real estate market. Although they do not fully question their investment strategy, patience is the order of the day in the current volatile environment of inflation, interest rate hikes and war in Ukraine”, says Jan Ohligs, partner at EY Real Estate and author of the study. .
95 percent of survey participants consider weather risks and transient risks in their investment strategies. 90 percent believe that sustainability has a positive effect on resale value in addition to the ecological effects of lower emissions. 95 percent of the participants also say that the lack of valid data makes it difficult to implement ESG strategies.
“Core” (70 percent) and “Core+” (85 percent) remain the insurance industry’s preferred investment targets as the lowest risk categories, but the focus on them is declining compared to the prior year ( 2021: 91 and 86 percent respectively). The riskier category “Opportunist”, on the other hand, is significantly more popular (now 40 vs. 18 percent in 2021). At the same time, insurers’ return expectations remain stable with minimal discounts (4.5 percent for direct investments, 5.5 percent for indirect investments in 2022 versus 4.7 and 5.6 percent in 2021) .
The “Trend Barometer for Real Estate Investments in the Insurance Industry” was created in 2022 for the fifteenth time. In May 2022, a survey was conducted among 30 leading companies in the local insurance industry. Various players in the insurance industry participated in the survey, such as pension funds and reinsurance and life companies.
For 95 percent of survey participants, residential real estate is in the spotlight, as it was in the previous year. Logistics companies are at 75 percent and investments in infrastructure at 63 percent.
The popularity of office properties has increased from 62 to 75 per cent this year, healthcare properties have fallen slightly from 46 to 42 per cent. Real estate retail and the hotel segment lost percentage points: the former fell from 37 to 20 percent, while the hotel segment fell from 14 to 5 percent.