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Investor Activity in Private Real Estate in the Last 12 Months - August 2012

by Carla Henry

  • 17 Aug 2012
  • RE

During June and July 2012, Preqin conducted extensive interviews with over 100 institutional investors in private real estate in order to find out about their current views on the asset class and their appetite for new investments. In order to give an indication of the level of activity in the past year, investors that participated in the study were asked about their commitments to private real estate funds in the last 12 months.

Fifty-four percent of the investors interviewed by Preqin had made new commitments to private real estate funds in the past 12 months. Levels of investor activity in the asset class varied in different regions. Sixty-nine percent of the North American investors interviewed by Preqin committed to private real estate funds in the past 12 months, compared to 76% of Asia and Rest of World-based investors.

Of the European investors surveyed, just 27% had made private real estate fund commitments in the past year. These results suggest that European investors continue to be affected by the on-going volatility in financial markets and the European sovereign debt crisis, which has led to a lack of investor confidence in the challenging real estate market. Larger investors were far more likely to have committed capital to private real estate funds in the past year. Sixty-eight percent of investors with $10bn or more in total assets committed to real estate funds during this period, compared to just 36% of investors with less than $1bn in total assets. Smaller institutions are more likely to halt investments due to market conditions and also typically make investments less frequently. Fifty-six percent of investors with $1- 9.9bn in total assets made new commitments to private real estate funds in the past 12 months.

Of the investors that committed to private real estate funds in the past 12 month, 65% committed to 1-2 private real estate funds, while 14% committed to 3-4 funds during the same period. Twenty-one percent of investors committed capital to five or more funds.

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