Institutional investors remain committed to real estate, but their appetite for new investments has declined significantly. At the same time, infrastructure and select segments of private debt are coming more into focus. The sixth edition of the study “Institutional Investors’ Preferences in Real Estate and Alternative Investments” thus paints a nuanced picture: high real estate allocations are met with growing caution, while energy, transportation, digital, and social infrastructure are gaining in appeal. For the first time, the study also examines how institutional investors view artificial intelligence and tokenization. In a conversation with Markus Hill, Sebastian Thürmer explains the key findings of the survey of 51 investors who collectively manage assets totaling 1.074 trillion euros (Part 1 of 2).
Hill: Mr. Thürmer, can you briefly summarize the key findings of your study, “Preferences of Institutional Investors in Real Estate and Alternative Investments,” now in its sixth edition?
Thürmer: For the study, we surveyed 51 institutional investors about their past investments and future considerations in the areas of real estate and alternative investments. Other topics included sustainability and, for the first time, the use of artificial intelligence and tokenization. In total, the surveyed participants manage assets totaling 1.074 trillion euros. Nearly 60 percent of the participants are insurance companies or pension funds. This means the proportion of traditional institutional investors is very high. Other investor groups include family offices, foundations, banks, savings banks, and industrial companies.
In real estate, the brief reversal seen in 2025 appears to have already come to an end. The appetite for new investments is currently low. Reasons likely include economic challenges, rising interest rates, and new competition from infrastructure projects. Real estate allocations remain high but are not being further expanded.
The outlook is better for alternative investments. Infrastructure investments in the energy, transportation, digital, and social sectors are in demand. Certain segments of private debt—particularly corporate debt and infrastructure debt—are also likely to see increased allocations. We also received interesting responses regarding sustainability as well as, for the first time, AI and tokenization.
Hill: Let’s turn to the assessment of the real estate asset class. You mention a waning interest in “concrete gold.” Are real estate investments still a preferred asset class for institutional investors at all?
Thürmer: Real estate certainly remains a preferred asset class. After all, 60 percent of the investors surveyed hold between 5 and 15 percent of their assets in real estate. Another 40 percent have real estate allocations ranging from 15 to over 30 percent. Between 2010 and 2020, the real estate allocation doubled for various reasons. As a result, we are currently experiencing a market-driven correction in the real estate asset class, which may continue for some time to come. Only 8 percent of the investors surveyed are planning to increase their holdings. 68 percent do not anticipate any changes, while 24 percent are considering reducing their holdings. This latter percentage is relatively high compared to previous years.
Hill: That sounds rather pessimistic!
Thürmer: The markets are indeed in crisis mode. The trend is clearly shifting toward core real estate, following a sharp increase in write-downs in recent years. Structural risks in particular—such as those in regions with a high proportion of industry—are now being assessed more critically. Another new factor in the risk assessment of domestic real estate markets is sensitivity to political and economic risks. Many investors see trends toward deindustrialization and, as a result, declining real estate markets. Rising construction costs due to higher raw material prices, climate change, new building codes, and steadily rising financing costs are placing a disproportionate burden on this asset class. Added to this are new competitors in the illiquid investments segment, such as infrastructure investments.
Hill: What types of properties are in demand?
Thürmer: There is interest in social and healthcare real estate—in other words, what tends to be referred to as “social infrastructure.” Residential properties, as a recession-resistant use type, and logistics are also viewed positively. Commercial real estate, such as offices and retail, on the other hand, plays hardly any role at all in new investments.
Hill: How do institutional investors plan to handle existing properties that are not yet up to the latest energy efficiency standards?
Thürmer: 47 percent intend to retrofit their existing properties for energy efficiency or have already done so. 22 percent plan to sell their portfolios. 26 percent are not currently considering any specific measures. However, there are significant differences among investor groups. Churches and insurers are setting an exemplary standard. Banks, savings banks, and pension funds are also active. Nevertheless, many investors view energy-efficiency retrofits as a costly obstacle.
Hill: Do investors still plan to make additional purchases of properties that haven’t undergone energy-efficiency renovations in the future?
Thürmer: 18 percent of the investors surveyed plan such acquisitions. 27 percent do not rule out purchasing properties that have not undergone energy-efficiency renovations. The majority—56 percent—have not yet made up their minds on this issue.
Hill: How are the changing interest rate and financing conditions affecting the investment decisions of institutional investors?
Thürmer: The current interest rate environment is leading to cautious interest rate and return forecasts. Investors must factor in rising financing costs. Over time, this is likely to lead to lower debt-to-equity ratios. This trend is already noticeable in the real estate sector. Sustainable, energy-efficient, and future-proof real estate concepts now have better and more affordable access to debt financing than properties that have not undergone energy-efficiency renovations.
Hill: What criteria do institutional investors consider when selecting a fund or a fund manager prior to making an investment decision?
Thürmer: Institutional investors expect a compelling investment strategy, a strong track record, and a robust deal flow, as well as—where applicable—an initial portfolio that can be implemented promptly. In addition, they look for professional financial management, meaningful reporting, transparency, and ongoing communication throughout the entire investment period.
Hill: In 2026, you expanded your scope of inquiry to include areas such as AI and tokenization. In which areas is AI being used, and to what extent is it already influencing the investment decisions of institutional investors?
Thürmer: AI is primarily used in research and financial analysis (21 percent), risk management (17 percent), and compliance (15 percent). It has played a lesser role so far in allocation decisions, currency management, and portfolio construction. Only 4 percent state that AI directly contributes to investment decisions. 43 percent incorporate AI results into their considerations, while 53 percent have not yet integrated AI.
Hill: In which areas do institutional investors see the greatest benefits of tokenization, and how do they assess its significance for the next five years?
Thürmer: In principle, tokenization is likely to offer advantages in terms of lower barriers to entry, the efficiency of processing and settlement, as well as transparency and reporting. At present, however, only about 18 percent of respondents consider tokenization to be of high or very high importance. 82 percent view it more as a niche application or attribute only minor importance to it.
Hill: Thank you very much for the interview.
LINK TO THE PANEL DISCUSSION / VIDEO “Preferences of Institutional Investors in Real Estate and Alternative Investments”:
Dialogue & Information:
FINANZPLATZ FRANKFURT AM MAIN on LINKEDIN – CHANNEL
FINANZPLATZ FRANKFURT AM MAIN on LINKEDIN – GROUP
FONDSBOUTIQUEN on LINKEDIN – CHANNEL
FINANZPLATZ-FRANKFURT-MAIN.DE, DACHLI Region & FONDSBOUTIQUEN.DE (2026) – Topics, Interests, Dialogue (Selection & “Snapshots”)
February 25, 2026, Frankfurt – “Frankfurt am Main Financial Center Meets Wealth Management”
(Markus Hill – Moderator: Christian Neuhaus – FINVIA, Sven Karkossa – Capitell Vermögens-Management AG, Noel Zeh – Wunderland Capital)
February 26, 2026, Frankfurt – “Forum for Digital Assets (FDV)”
Editorial Team – Special Feature: “Frankfurt am Main as a Financial Center Meets Wealth Management & Digital Assets”
(Interviews / Guest Contributions, “Support” & MORE: info: markus-hill.com)
March 17, 2026, Frankfurt – Private Markets Excellence Forum – “Private Markets, Family Offices & Foundations – Due Diligence & Outlook 2026”
(Markus Hill – Fireside Chat: J. Paulo Dos Santos – Managing Director, VIRATIO GmbH)
Interview with Christian Hommens – SMART IMPACT INVESTING & PRIVATE MARKETS
Spring 2026: Investor Study “Preferences of Institutional Investors in Real Estate & Alternative Investments”
(Markus Hill – Moderator, Podcast: Sebastian Thürmer, “artis & x” – Example 2025)
April 16, 2026 – “köln let’s talk” – Bettina Timmler – Real Estate & Dialogue
(Media Partnership)
May 12, 2026, Frankfurt: “Value Investing & Commodities & MORE”
(Markus Hill – Moderator & brief introduction “Fund Boutiques & the U.S. Formula” – Alex J. Rauschenstein & Urs Marti, SIA FUNDS AG – FINANCIAL CENTER SWITZERLAND)
June 17, 2026, Zurich: Insights – “Family Offices & Fund Boutiques” – The Mountain Talks Summit – FUNDPLAT
(Presentation – Markus Hill)
September 24, 2026, Lucerne: “Swiss Digital Finance Conference 2026” – Markus Hill (PARTNER) speaks with Jan Carlos Janke, lecturer in Digital Business & Innovation at Lucerne University of Applied Sciences and Arts – Computer Science
November 10, 2026, Frankfurt: “Frankfurt am Main Financial Center Meets Liechtenstein Financial Center”
(Markus Hill – Moderator – LAFV Liechtenstein Investment Fund Association: Panel & Presentations)
Input, ideas, and suggestions on the topics mentioned above are welcome:
info@markus-hill.com / +49 (0) 163 4616 179
Photo: Pixabay & Frankfurt Financial Center
Quelle: IPE DA.CH
