BAI survey with 107 institutional investors: Infrastructure boom and real estate slump – What institutional investors are buying now

The German Association of Alternative Investments (BAI) has published its annual Investor Survey 2025. This is the twelfth time the association has provided insight into the private market allocation of German institutional investors.

The survey involved 107 institutional investors, collectively managing over €2.23 trillion in assets. In addition, 147 BAI member firms, primarily global asset managers, were surveyed.

Alternative investments as a fixed portfolio component

The figures demonstrate the importance of alternative investments: They account for an average of 30.31 percent of the institutional portfolio. This ratio remains stable compared to the previous year and, according to BAI officials, underscores the relevance of the asset class for professional investors. Taking into account the size of the investors (assets under management), the weighted average is even higher at 30.85 percent.

The composition shows a diversified allocation: Real Estate Equity leads with 9.29 percent of the total portfolio, followed by Corporate Private Equity with 6.13 percent and Infrastructure Equity with 4.51 percent.

Average alternative investment allocation in detail

Source: BAI Investor Survey 2025

German institutional investors have expertise in alternative investments. In a self-assessment on a scale of one (beginner) to six (expert), 61 percent rate their teams at levels five or six. The number of market entrants remains stable at a low level – only 2.8 percent describe themselves as beginners. This reflects the many years of experience of DACH investors in this area.

According to the study authors, the increasing diversification is also remarkable: 70 percent of the investors surveyed are invested in at least four different alternative asset classes. One-third of investors even diversify across seven or more asset classes. This broad spread illustrates the increased understanding of the different return-risk profiles within alternative investments.

Infrastructure: The growth driver

The survey confirms the continued high demand for infrastructure investments. As in the previous year, significant capital inflows are expected for this asset class in 2026. Currently, 79 percent of the investors surveyed are investing in infrastructure equity and 40 percent in infrastructure debt. The outlook shows further growth potential: 84 percent will be invested in infrastructure equity in the future.

A clear picture emerges regarding planned allocation adjustments: 53.8 percent of investors in infrastructure equity plan to increase their allocation, while only 7.7 percent intend to reduce it. The picture is similar for infrastructure debt: 54.1 percent plan to increase their allocation, while only 8.1 percent plan to reduce it.

Planned allocation adjustments by asset class

Source: BAI Investor Survey 2025

The table shows: Infrastructure leads the way, with over 50 percent of increases planned. Real estate remains under pressure, with high reduction rates. Bonds lose ground, while equities gain.

Asset managers are recognizing this trend – many general partners are building infrastructure teams to provide DACH investors with access to this asset class.

Private debt with top marks

Private debt is becoming a success story among alternative investments – this asset class leads the rankings in satisfaction surveys. Investors are increasingly diversifying their private debt allocation through credit specialty strategies.

Currently, 72 percent of the investors surveyed are investing in corporate private debt, and 23 percent in credit specialties. Demand remains high: 45.7 percent plan to increase their private debt allocation, while only 8.6 percent plan to reduce it. Although momentum has slowed slightly compared to the previous year, demand for private debt remains higher than for private equity.

Private Equity: Solid Satisfaction

Private equity is showing positive year-on-year development. Investors are generally satisfied with the performance of their private equity investments. 83 percent of investors are invested in corporate private equity, while the figure for venture capital is 41 percent.

Allocation plans are balanced: 39.7 percent intend to increase their private equity allocation, 51.3 percent maintain the status quo, and only 9 percent plan to reduce it. This reflects the continued important role private equity plays in institutional portfolios – even though the relative preference for private debt has declined slightly.

Real estate: cautious restraint

The real estate market is showing mixed results. Although markets are recovering after the difficult past years and investors are becoming more optimistic about the market, they remain cautious in their allocation decisions. Many limited partners intend to further reduce their real estate allocation.

For real estate equity, 49.3 percent plan to increase their allocation, but 41.79 percent plan to reduce it. Capital flows for real estate debt remain particularly weak: 42.4 percent intend to increase, but 48.5 percent plan to reduce. This reluctance contrasts with the improved sentiment and indicates that the events of the recent market correction have not yet been absorbed.

One positive aspect is the increased satisfaction with the performance of existing real estate investments. After years of disappointment, the sentiment barometer shows a noticeable recovery – a glimmer of hope for future developments.

Interest rate turnaround favors stocks and alternatives

As interest rates fall, strategic asset allocation is changing. Demand for bonds is declining noticeably: 60.7 percent of investors intend to keep their bond allocation unchanged, but 22.6 percent plan to reduce their allocation, while only 16.7 percent plan to increase it.

Equities and alternative investments are benefiting. For equities, the intention to increase holdings clearly predominates: 63.1 percent intend to increase their holdings, while only 10.7 percent intend to reduce them. This trend is giving additional impetus to the allocation to alternative investments, as investors seek sources of return beyond traditional bonds.

Bitcoin and Co. remain in the niche

Increasing diversification is also benefiting niche segments. Natural capital, insurance-linked securities (ILS), credit specialties, and liquid alternatives are seeing growing interest. In natural capital, the proportion of investors invested rose from 9 percent (2022) to 15 percent (2025), with an outlook of 26 percent. ILS/Cat Bonds grew from 12 percent to 24 percent.

Venture capital is also developing positively: 41 percent of investors are invested, and the outlook is for 43 percent. Liquid alternatives and hedge funds also remain a relevant portfolio component, with a current allocation of 15 percent.

Cryptocurrencies and tokenized assets, on the other hand, remain a niche: only 4 percent of institutional investors are involved here, with an outlook for 6 percent.

Defense: Discussed, but not yet invested

A new topic is gaining importance: defense investments. Both Limited Partners and General Partners recognize defense as an emerging or already established megatrend. 24 percent of investors already see defense as a megatrend, and another 34.4 percent consider it an upcoming trend.

However, there is a significant gap between awareness and implementation. Only 9.5 percent of investors are already directly or indirectly invested in defense, while another 21.1 percent plan to do so. The majority, 63.2 percent, remain wait-and-see. Many investors have their hands tied by internal self-restraints and restrictions and must first adjust their investment guidelines before they can become active in this segment.

ELTIF 2.0 is gaining importance

The European Long-Term Investment Fund (ELTIF) is increasingly establishing itself as a vehicle for private markets. The BAI survey reveals a remarkable finding: 26.3 percent of the asset managers surveyed already offer ELTIF structures, and another 47.5 percent plan to do so.

Contrary to popular belief, Eltifs are not exclusively aimed at retail investors. 78 percent of providers target professional investors, 80.5 percent semi-professional investors, and 56.1 percent private investors. The focus asset classes are private debt (58.54 percent), infrastructure (46.34 percent), and private equity (36.59 percent).

Regulation: Harmonization instead of centralization

On regulatory issues, market participants are taking a clear stance. A key message is the clearly articulated desire for simplified and better harmonized regulation, particularly in reporting and fund supervision. At the same time, more centralized supervision at ESMA is clearly rejected.

73.33 percent of investors and 73 percent of asset managers call for a streamlining and better focus of regulatory reporting requirements. Regarding the SFDR (Sustainable Finance Disclosure Regulation), there is clear support for the current system: 69.14 percent of investors and 70.48 percent of asset managers want to maintain the existing disclosure framework (Articles 6, 8, and 9) in principle, but simplify it.

"With over 30 percent of private markets and alternative strategies, institutional portfolios are well positioned for the long term. Managers who can offer investors access to previously niche areas such as credit specialties, ILS, and natural capital will benefit from the increasing diversification," says Philipp Bunnenberg, BAI Head of Alternative Markets.