The last few years have been challenging for those seeking to raise capital for private real estate funds, with a large proportion of investors reluctant to make new commitments to the asset class, or committing less capital than they have in the past. While there are still many investors that are not expecting to be active, there are also an increasing number of institutions which are planning to commit fresh capital in the coming months.
Preqin research suggests that real estate fund of funds managers are the group which expects to be the most active in the year, with 74% planning new commitments in the next 12 months. Sixty percent of superannuation schemes expect to make new commitments and 52% of asset managers expect to be active. Active asset managers include the Netherlands-based Shell Asset Management Company, which plans to invest in four to six funds in the coming months and will invest in a range of fund strategies.
At the other end of the scale, only 29% of private sector pension funds and 33% of family offices plan to make new commitments in the coming year, with a large proportion of these investors content to remain on the sidelines. One private sector pension fund that is anticipating making new investments is the US-based E.I.Du Pont De Nemours and Company Pension Plan. It expects to make one to three new commitments, with a focus on core and core-plus strategies.
Overall, only 42% of private real estate fund investors expect to make new commitments in the next 12 months, illustrating that fundraising is likely to remain challenging in the coming year. There are many active institutions, but for fund managers seeking to raise new funds indentifying the right investors will be more important than ever.