Looking back on 2025: The market is not nervous – it is in the process of restructuring!

Behind the mood in the institutional fund business, described as market uncertainty, there is actually something else: the tidying up of temporary solutions.
Anyone who takes the trouble to look behind the scenes of the supposed "mood" recognizes structural shifts that not only explain the year 2025, but are also crucial for correctly classifying 2026.

This year had no news that would have explained everything. Instead, there was a permanent background noise.

Conversations between institutional investors and fund providers often followed the same pattern: investors didn't say "no", but they didn't say "yes" either. Products that were "actually good" still didn't want to work in sales.

The word that was often used was: "nervousness" or "market uncertainty".

Neither is true. Only those who don't know what's happening are nervous. In 2025, many market participants knew exactly what was happening, but not how to deal with it.

What we experienced was not market uncertainty, but a transition.

The real estate markets continued to be under pressure in 2025. That is undisputed.

However, anyone who describes the year as a mere continuation of the real estate crisis falls short. Rather, what is recognizable is a restructuring that, once completed, lays the foundation for new opportunities.

Economical: Interest rate and price adjustments, a stronger focus on real value drivers and the reassessment of exit logics.

Regulatory: New interpretations of risk, refocusing ESG on relevant purposes determine the outlook for the upcoming new year.

Many fund products were not bad. In some cases, however, they were no longer suitable - to new yield requirements, to new regulatory realities and also to the question of how the real estate asset class should still be structured and used sensibly at all. What is the appropriate "feel" of a fund today, which in turn is linked to the overarching question: After the last interest-driven boom, in which real estate had the character of a bond proxy for parts of the institutional investor community, how do different types of investors actually want to "access" the real estate asset class today?

At the same time, infrastructure has often been (re)discovered as a "beacon of hope".

This also falls short as a picture of the situation.

Infrastructure is the asset class that fits particularly well with the increasingly prevailing institutional logic: increased institutional usability and stable, flatter and less volatile yield requirements that provide relative calm compared to the temporary cyclicality of real estate investment.

In 2025, infrastructure did not benefit from market sentiment, but from the promise of stability - through regulation, cash flows and an embedded contract structure.

Infrastructure does not replace real estate. But it complements them at a time when institutional portfolios are being rebalanced.

Many market participants find the current regulation hectic or overwhelming. 2025 alone: SFDR 2.0, SIU, AIFMD II – too much, too fast and everything very, very technical again.

But here, too, it is worth taking a second look.

What we are currently experiencing is not a regulatory mess, but a profound process of professionalization of the entire market.

For years, liquid and illiquid investments have been treated separately – in logic, governance and supervision. This separation is beginning to dissolve.

The requirements for control, transparency, liquidity management, risk control and reporting channels are converging.

At the same time, asset management companies are increasingly entering a regulatory orbit that was long reserved for traditional credit institutions.

As a result, KVG is increasingly developing into a regulated infrastructure operator. This role cannot be mastered with more staff alone – and certainly not permanently and profitably. As with credit institutions, it is also evident here that professionalization succeeds primarily through technological innovations in processes, governance and control architecture. This is a hard bread in the real estate fund world, whose starting point is sometimes characterized by archaic processes. Process issues that, in addition to the promising investment management, had been strategically part of the overall organization as an annoying annex evil, are suddenly central to the question of operational management.

👉 Professionalization has structural consequences

• Regulatory logic favors size, but above all process stability
• This raises entry thresholds and inevitably leads to market concentrations
• In this context, professionalization does not mean simplification, but higher demands – for everyone

👉 Investors are not nervous – they filter!!

• Investor reluctance is often interpreted as a sentiment problem, but this is too short-sighted
• Rather, investors behave rationally
• They accept risk if it is explainable; they accept complexity if it is manageable; they may even accept lower returns if they are risk-adjusted reasonable, but not for a lack of transparency, which is increasingly frowned upon in fund structures

👉 2025 was not a new cycle, but a sorting

• Looking back, 2025 was not a year of big, visible changes
• It was a year of sorting, not (only) between asset classes, but also between structures
• And between products that are still (too much) built according to old thought patterns and those that have already arrived better in the new institutional reality