Institutionals Green light for future-proof tangible assets

Dr Nicole Arnold is a new member of the Board of Commerz Real. In this interview, she talks about the challenges facing the market for real assets and the opportunities that can arise from them - both for investors and for society as a whole.

My responsibilities as a member of the Executive Board include Institutional Sales and Group Treasury, Product Management Institutional Clients, Green Deal Infrastructure Investments, Retail Distribution and CFB Funds. I dedicate a large part of my time to the institutional business. 

My team and I would like to support Commerz Real in this area and actively drive it forward. Thanks to our many years of experience in structuring special funds and individual mandates and a long track record in real estate and sustainable infrastructure, we also have the necessary expertise. 

In the long term, I would like to concentrate on developing visionary and future-orientated concepts for institutional investments - not only in Germany, but all over the world. 

In fact, new investment opportunities will soon arise for our customers in the Institutional Investments product area - both with regard to property and renewable energies. One example is the development of two Danish solar parks, in which professional and semi-professional investors will soon be able to invest. They will benefit from potential returns and make an effective contribution to our environment.

We would also like to combine our two areas of expertise, renewable energies and property, in a joint ecosystem in the future. This would enable us to supply our tenants with favourable green energy.

In the property sector, the need for energy-efficient refurbishment in particular is providing new impetus. With more than 75% of energy-inefficient properties in Europe, such refurbishments will be unavoidable in the coming years.

With our "Manage to Green" and "Manage to ESG" concepts, we are already successfully tackling this challenge in our own portfolio by utilising climate-friendly resources and modern technologies. In doing so, we are not only strengthening our economic position, but also assuming responsibility for society as a whole and ensuring positive changes in our market environment.

Inflation has established itself as a new driving force on the market. However, a major advantage of real assets is that they generate inflation-protected income despite a loss in value. 

Property funds in particular have proven themselves in the current market environment: While the net inflow of funds for open-ended special funds has fallen from 131 to 62 billion euros in the last two years, the share of property funds (just under 13 billion euros) has remained almost the same. 

Real assets therefore prove their worth in different market situations: They can hedge against losses to some extent during periods of recession, while they benefit from increases in value during periods of growth. Tangible assets in the renewable energy sector are also gaining stability, particularly due to the falling demand for fossil fuels.

Actively managed real asset investments are and will continue to be an important component of a diversified institutional portfolio. However, it is important that asset managers take current issues such as interest rates, inflation and higher energy prices into account in their management concept. Those who take on such challenges and recognise the opportunities will also prove their worth to investors in the long term. 

In addition, the integration of ESG (environmental, social and governmental) criteria also plays a key role for real assets: according to a recent study, 57% of investors have now committed to no longer investing in non-ESG funds. This applies to both new investments and existing portfolios, which are increasingly being focussed on energy. 

ESG investments are therefore the growth engine of the future - and are causing a real paradigm shift on the financial market.