Preqin’s Real Estate Online service currently maintains detailed profiles of 230 asset managers investing in the real estate asset class. While this investor type represents a relatively small proportion (5%) of all investors in real estate, their significance is not to be overlooked; these firms manage over $7.9tn in combined assets and have an aggregate current allocation to real estate of $311bn, indicating that the capital pool available to asset managers allows them to encourage substantial diversification within their clients’ portfolios. In terms of routes to market, 51% of asset managers look to invest directly in real estate, while 44% prefer to gain exposure through listed real estate. Fifty-seven percent of asset managers invest in the asset class through private real estate funds.
In terms of fund strategy preferences, the chart above reveals that the most attractive strategy for asset managers is core, with 70% of investors indicating an interest in low-risk core vehicles. Opportunistic funds and value added funds are targeted by 58% and 55% of asset managers respectively. Thirty-six percent of asset managers have indicated an interest in real estate debt funds, with a further 30% showing a preference for distressed vehicles.
Europe is the most prominent location to invest in real estate for asset managers, with 69% of investors indicating a preference for the continent. This is followed by North America, with 51% of asset managers holding an interest in this region, and Asia (41%). Countries outside North America, Europe and Asia are targeted by 26% of asset managers. Looking at a breakdown of these markets, 14% of asset managers would invest within Australasia and 7% of asset managers would invest within the South American property market.
The wide variety of preferences shown by asset managers, both in terms of fund strategies and locations, indicates that while this investor group is not the largest of those which invest in real estate, their potential impact within the asset class should not be overlooked.