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Key Strategies and Geographies Targeted by Private Real Estate Investors in the Next 12 Months

by Sarah Unsworth

  • 05 Sep 2012
  • RE

During June and July 2012, Preqin conducted a series of extensive interviews with over 100 institutional investors in private real estate in order to determine what types of real estate funds they will be targeting in the coming 12 months.

Results show that core and opportunistic are the strategies that are attracting the most interest from investors that will be committing to funds in the next 12 months. Forty-six percent of investors interviewed said they planned to invest in core funds and 35% said they would invest in opportunistic funds. Value added, debt, and core-plus strategy funds will be targeted by a smaller proportion of investors, with 24%, 22%, and 19% of respondents intending to invest in these strategies respectively.

Many investors committing to real estate funds in the next 12 months plan to focus on their own domestic regions. Fifty percent of North American investors plan to invest in North American funds, 67% of European investors will invest in Europe-focused funds, and 47% of Asia and Rest of World investors will target Asia-focused funds. While many institutions have always invested closer to home, this also reflects how selective investors are being when making new commitments, with many focusing on the specific markets where they believe the best opportunities lie.

Fifty percent of North America-based investors and 33% of Europe-based investors said they would invest on a global basis over the next 12 months. Only 11% of Asia and Rest of World investors said they planned to invest globally, but 37% will invest in North America-based funds in the next 12 months, and 42% will invest in European funds, showing that Asia and Rest of World investors are potentially a key source of capital for fund managers in these regions.

Europe- and North America-based investors do not have a large appetite for Asian real estate, with just 22% of European and 20% of North American investors targeting Asia in the next 12 months. Many of these investors have been focusing on the more established, liquid real estate markets in recent years and this trend looks as if it will continue in the coming months.

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