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Munich Re and MAPFRE invest in European real estate fund

‘During the pandemic, attractive office properties in central locations have proven again to be a potential source of steady income’


Pete Carvill

Asset manager MEAG has launched a European core office property fund.

According to the firm, the fund will focus on high-quality office properties in Europe. Munich Re and insurer MAPFRE will be partnering as seed investors. The two firms will be contributing to the initial asset portfolio through already-owned German and Spanish properties.

Frank Becker, managing director responsible for institutional clients at MEAG, said: “Over the last years, we have successfully grown our footprint in the institutional investor segment as the partner of choice, and we continue to do so. This is the case for traditional asset classes as well as real assets, as we provide holistic and tailor-made solutions in both segments. High-quality, well-diversified office property investments continue to be an important building block in institutional portfolios. “

He added: “During the pandemic, attractive office properties in central locations have proven again to be a potential source of steady income. Therefore, we are happy to add to our range of investment solutions with a new property fund supporting our clients’ needs.”

Following the initial phase, the fund will purchase further office properties across the continent to build a pan-European portfolio. The fund volume is intended to reach around €500m by 2023. In 2024, the fund will open for investments by other institutional investors from Germany and Europe, underlining MEAG’s ambitions to further expand its business in the institutional clients segment. This shall grow the fund to €1bn by 2025.

After the struggles of the last two years, 2022 may not be the worst time for a firm to invest in office property. Even if residential property in Germany is overvalued by over 40%, most nations within the continent are slowly moving to put workers back in offices after two years of the coronavirus pandemic.

In March, the German government dropped the obligation for employers to offer home working to people. Meanwhile, the English-language edition of Spain’s El Pais newspaper reported last November on how remote working was losing momentum in the country following various stumbling blocks that legislation had inadvertently thrown into the road.

Meanwhile, Poland has seen its own real estate market take a hit in recent months because of the conflict between Russia and Ukraine (AKA Russia illegally invading its neighbour).

As PERE reported this week: “European commercial real estate investment volumes reached €78bn in Q1 2022, the second-strongest first quarter on record after 2020, when €90bn of transactions closed during the same period, according to preliminary data from real estate advisory firm CBRE. But while first-quarter volumes were up year-over-year in most of the region’s markets, Q1 2022 volumes dropped 26% in Poland during the same period, the data revealed.”