The worst is yet to come for the European real estate fund management industry, according to Andrew Thornton, CEO of Internos Real Investors. 'The next two years will bring an industry shakeout - 'meltdown' could be appropriate - in which the survivors will be those who go in strong and are most realistic in addressing investor concerns.'

In the latest issue of the company's publication 'Decisive Eye', Thornton points out that many fund management organisations have already been disbanded, taken over or cut down in size. ‘As the economic news grows ever more gloomy, real estate fund managers, weakened by three years of trimming sails to severe crosswinds, now face the perfect storm of a second recession, new demands from investors, institutions staffing-up to replace or duplicate their skills, looming peaks in loan and fund maturities, banks hamstrung by sovereign debt crises and threats posed by EU directives on alternative investments. Only the fittest will survive.’

Internos estimates that an investor determined to manage real estate investment on a do-it-yourself basis could create a convincing fund and asset team with EUR 250 mln AUM for a UK-sized country, EUR 1 bn for Europe and perhaps EUR 2 bn AUM to justify global scope. 'Operating costs would be about on a par and the investor would boast control and transparency. But, at these levels, the team would be a generalist team - concentrating on the perceived mainstream - mainstream countries and mainstream sectors - and, inevitably, mainstream returns.'

Internos Real Investors is an owner-managed, independent and internationally active investment fund and asset management platform based in London. The company, which was founded by Jos Short and Thornton in 2008, also operates from Amsterdam and Luxemburg, as well as the central location of Frankfurt in Germany.