Opportunistic Private Real Estate Funds: Declining in Favour? – September 2015

by Lauren Mason

  • 28 Sep 2015
  • RE

Preqin’s Real Estate Online tracks 124 opportunistic real estate funds currently in market, targeting an aggregate $46bn in institutional capital commitments. This figure is considerably lower than the same time last year, when 139 primarily opportunistic funds in market were targeting $54mn. The decrease in number of funds being raised and aggregate capital being targeted does not necessarily suggest a decreasing appetite for opportunistic real estate funds; it may simply be a reflection of a surge in appetite for other types of vehicle. This is indicated by the results shown in the Preqin Investor Outlook: Alternative Assets, H2 2015, where 44% investors surveyed stated that they would look to invest in opportunistic real estate funds over the next 12 months, compared with 54% of investors targeting value added and core vehicles respectively.

As shown in the chart above, the majority of the capital targeted is directed towards North America (52%), with $24bn targeting the region, followed by Asia (20%), Europe (14%) and regions outside the aforementioned areas (13%). In terms of property types targeted, 73 vehicles are targeting a diversified range of properties and targeting $37bn in capital commitments, over double the number of vehicles and over five times the aggregate capital targeted by primarily residential-focused funds. Vehicles focused on niche property types and those targeting retail property account for 2% of aggregate target capital each, while hotel- and land-focused vehicles are targeting 1% of aggregate capital respectively.

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