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An Overview of Europe-Based Private Real Estate Investor Preferences – October 2015

by Lydia Clark

  • 12 Oct 2015
  • RE

Preqin’s Real Estate Online service currently tracks 1,161 Europe-based institutional investors active in the real estate asset class, collectively holding approximately €20tn in assets under management (AUM). The majority of Europe-based investors (66%) hold less than €5bn in AUM, while only 15% might be considered large institutions (with more than €20bn in AUM).

As shown in the chart above, there is a clear preference among Europe-based investors for investing in lower risk funds; 82% target core private real estate vehicles, compared with 43% and 36% targeting higher risk value added and opportunistic funds respectively. Unsurprisingly, Europe-based private real estate investors favour European investments; 96% focus on their domestic market, undoubtedly hoping to take advantage of their local market knowledge. However, there is still strong interest in North America- and Asia-focused funds, with a quarter of Europe-based investors targeting these regions.

Pension funds are the most common Europe-based institutional investor, representing 58% of the total population active in real estate. Private sector pension funds are more prevalent than their public sector counterparts (39% of investors versus 20% respectively), with insurance companies (12%), asset managers (9%) and foundations (8%) all representing notable proportions.

Many Europe-based investors have plans for further commitments to private real estate over the next year. Germany-based Bavarian Pension Chamber intends to commit €150-200mn to three or four global private real estate fund of funds vehicles in the next 12 months, while Switzerland-based public pension fund AHV Equalisation Fund plans to commit CHF 15-150mn in one to seven private real estate funds that target real estate opportunities in UK, European and US property markets.

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