Preqin carried out a survey of 166 institutional private real estate investors between June and August 2010. Investors of varying size, type and geographic location were questioned about their private real estate portfolios and their approach to the market in the next 12 months.
Of the investors surveyed, 42% stated they were likely to commit to private real estate funds in the next 12 months, 39% said that they were unlikely to invest and the remaining 19% were undecided. Although these figures are disappointing compared to previous years, it does show that there is momentum in the market and that there are institutions open to new fund proposals in the current environment.
The 19% of undecided investors highlight the fact that many institutions are remaining cautious in their attitudes towards new private real estate fund commitments. They are opting to monitor opportunities on an ongoing basis rather than actively seeking investments. This contrasts with previous years when the majority of investors were able to predict both the number of funds and the amount of capital they would commit to the asset class in the following 12 months.
One of the most interesting findings of the survey was the current position of investors’ portfolios relative to their targets. 73% of investors are below their targeted real estate allocations, which shows the caution being exercised in the market, with even those below target reluctant to commit to new vehicles. However, the fact that these investors are maintaining their targets indicates that, over the longer term, the industry is due to receive an influx of new capital, with many investors not needing to wait for distributions before making commitments once confidence returns.
You can view the full results of this real estate investor survey here.