Deutsche Bank's asset management arm, DWS, is reportedly exploring options to curb investor withdrawals from its open-ended German property funds. This consideration comes amid a challenging environment for real estate funds, marked by persistent redemption requests from investors. The company has not yet confirmed the specific measures it might implement, but such actions typically include redemption gates, temporary suspensions of withdrawals, or increased redemption fees.
This move by DWS is reflective of a broader trend within the European and US real estate fund markets. Several major asset managers have been grappling with similar redemption pressures on their open-ended real estate funds. For instance, UBS recently gated a $400 million property fund for up to three years, and other funds have resorted to asset sales, sometimes at a discount, to meet investor demands. The RREEF Property Trust, a US real estate fund managed by DWS, is also liquidating all its assets due to redemptions.
The German open-ended real estate fund sector, while showing signs of stabilizing property portfolios, continues to face significant investor outflows. Net outflows for the sector reached $7.6 billion in 2025, following $5.9 billion in 2024, reducing total assets under management to approximately $112 billion from $120 billion. Experts anticipate outflows to persist through 2026, with Q1 2026 seeing roughly $1.8 billion in net redemptions. Funds like Wertgrund WohnSelect D, Fokus Wohnen Deutschland, and UBS (D) Euroinvest Immobilien have already suspended redemptions due to insufficient liquid assets.
These pressures highlight a fundamental tension in open-ended property fund structures: the promise of liquidity versus the inherent illiquidity of the underlying assets. When market conditions sour, as they have with rising interest rates and softening commercial property outlooks, this structural mismatch becomes problematic. Funds are being pushed into selling assets in a congested market, often driven by liquidity management rather than strategic repositioning, which can impact pricing and returns. Average sector returns in 2025 were a loss of 1.2%, with a projected loss of 0.5% to 1.5% in 2026, indicating continued challenges for the industry.
