With the private real estate market witnessing a number of incoming and proposed regulatory changes in 2013, Preqin recently asked investors what they believed the key issues are in the current real estate market, and the impact that recent regulation has had on their allocations. The results were featured in Preqin Investor Outlook: Alternative Assets, H2 2013.
For investors in the private real estate asset class, the economic environment continues to be the key issue affecting the market in 2013, with 42% of respondents stating that this was the most important factor, increasing from 40% in December 2012. Despite real estate demonstrating encouraging performance in recent years, performance is a key issue for 27% of investors interviewed in August 2013, increasing from 20% in December 2012. As a result of new regulation coming into play in the first half of 2013, regulation and its impact on the private real estate market is a key issue for 15% of respondents. Fees were a key issue for only 10% of respondents.
When investors were asked whether recent regulatory changes and proposals, such as AIFMD and Solvency II, had had an impact on their private real estate investments, the overwhelming majority (92%) responded that it had not caused them to make any change in their allocations to the asset class. With 92% of investors interviewed stating that they would be maintaining or increasing their allocations to real estate in the longer term, this demonstrates the confidence investors have in the asset class going forward, with recent regulation having little impact on their investments so far. Nonetheless, the majority of respondents (52%) are unsure whether regulations introduced in the last three years are beneficial to the private real estate industry, indicating that the impact on respondents’ investments is as yet unclear, and may be felt more in the coming months.