‘Farsightedness decides: How institutional portfolios will be successfully positioned in 2030’
Chapter 6 of the 6-part series “REAL ESTATE STRATEGY 2025+: REVITALIZATION, REPOSITIONING, SECURING THE FUTURE”
The last few years have presented the institutional real estate industry with enormous challenges. But they have also opened up new perspectives: The ability to actively shape change is increasingly decisive for success in the market. If you want to remain competitive until 2030, you not only have to “manage” your portfolio, but also strategically develop, adapt and think ahead. So the central question is: What does a successful real estate portfolio look like in 2030?
What will successful real estate portfolios look like in 2030?
- A look ahead shows that the winning portfolios of the future are not products of chance, but the result of systematic management. They combine four central characteristics:
- Diversified and resilient: Successful portfolios no longer rely solely on core office properties in A-cities, but combine different asset classes (e.g. residential, life science, mixed-use properties) and location types (e.g. Europe-wide diversification, metropolitan regions, strong secondary cities, ). This creates a robust income mix – regardless of short-term market distortions.
- Climate neutral: By 2030, no institutional portfolio will last without ESG compliance. In particular, the CRREM pathway is no longer optional, but is becoming the central tool for assessing the climate compatibility of real estate. This process is irreversible, even if the political zeitgeist is trying to change again in some places. The CRREM path becomes a mandatory prerequisite for marketability, financing and ultimately performance.
- User-centric: Real estate no longer only covers the space requirements of tenants, but is a service platform. Successful properties are geared to the needs of their users – from tenant comfort and flexibility to sustainable mobility and service offerings.
- Capable of transformation: Markets change – successful portfolios can go with it. That is: assets that can be customized. Managers who actively steer. Transactions that bring additions and exits. A particular challenge will be to question traditional perceptions – such as the idea that a long-term lease automatically turns a property into a core investment. This false sense of security has often proven to be deceptive in the past.
Three strategic options for institutional investors
Depending on the initial situation and risk profile, there are three different strategies for aligning portfolios with the year 2030:
- “Stabilize & optimize”: For investors with a large portfolio and a conservative profile. The focus is on the ESG-compliant, technical upgrading of existing assets, the management of problem properties and targeted cost optimisation. Particularly important: checking whether seemingly stable core properties are actually competitive in the long term – or whether structural risks lurk behind the façade.
- “Transform & Diversify”: For investors with pressure to change and/or strategic vision. Repositioning of non-performing properties, targeted portfolio shift into more resilient asset classes, deliberate creation of selective exit opportunities. The key is to recognize potential early on and not to remain in the status quo out of convenience – a typical pattern in the context of the principal-agent conflict.
- “Renew & Develop”: For investors with greater risk tolerance or expansion strategy. Development of new portfolios, investment in future markets (e.g. life science, rental housing), partnerships with specialized managers. This is where the importance of a professional setup becomes apparent – because without clear control, even an innovative strategy threatens to fail in the implementation dilemma.
In all three cases, the path to 2030 cannot be mastered without well-founded data, clear target visions and active management.
GalCap’s Perspective on the Coming Market Cycles
The institutional real estate portfolio of the future is changeable, resilient and, above all, strategically thought-out. The coming years will challenge – but also reward investors who are willing to break new ground.
With active management, a clear ESG focus and an agile, market-driven portfolio strategy, it is not only possible to cushion risks, but also to exploit opportunities in a targeted manner. It is also important to reflect on internal incentive structures: Those who make investment decisions primarily on the basis of whether they “fit into their own period of responsibility” risk long-term damage. On the other hand, those who are willing to think about responsibility beyond their own term of office are helping to shape not only the present, but the future of the market.
The future begins now – and it belongs to those who shape it.
Result
The institutional real estate portfolio of the future is changeable, resilient and, above all, strategically thought-out. The coming years will challenge – but also reward investors who are willing to break new ground.
With active management, a clear ESG focus and an agile, market-driven portfolio strategy, it is not only possible to cushion risks, but also to exploit opportunities in a targeted manner. It is also important to reflect on internal incentive structures: Those who make investment decisions primarily on the basis of whether they “fit into their own period of responsibility” risk long-term damage. On the other hand, those who are willing to think about responsibility beyond their own term of office are helping to shape not only the present, but the future of the market.
The future begins now – and it belongs to those who shape it.
