Between June and August 2010 Preqin carried out a survey of 166 institutional private real estate investors, of varying size, type and geographic location. We asked t hem about their private real estate portfolios.
Respondents were asked which strategies they felt were most appealing in the current market. Opportunistic and core funds were considered the most appealing fund types, with 38% and 34% of investors stating each strategy respectively. Distressed and debt funds were indicated by 26% of investors and 11% felt that direct investments in the asset class were the most appropriate strategy in the current climate.
Those interested in investing in core and core-plus vehicles in the next 12 months were asked to explain their motivations for targeting these strategies. 49% stated that the low risk associated with such investments were central to their decision in committing to these vehicles. Investors are looking to limit the level of risk in their portfolios in light of the losses suffered from some higher risk investments. 40% were attracted to the stable returns and income generated by such funds. 26% wanted to stabilize their portfolios with these funds as well as diversify their high-risk portfolios with vehicles lower down in the risk/return spectrum. Another reason, given by 14% of investors, was that these vehicles utilize little or no leverage, and many investors are concerned about the large amounts of leverage employed by the higher-risk strategies. 9% stated that being able to access an existing portfolio of assets and assessing the portfolio before making an allocation, was also an incentive. 6% felt that the additional liquidity offered by these funds was important to them.
You can view the full results of this real estate investor survey real estate investor survey here.