Investor intentions towards future commitment levels to private real estate funds vary based on geographic location and assets under management. Preqin’s results indicate that Asia-based investors are set to be the most active, with 69% of these investors actively seeking to invest in new private real estate funds. A shift in investor attitudes, with many Asia-based institutions diversifying away from traditional investments to alternative investments, coupled with changing regulations in recent years allowing more Asia-based institutions to invest in real estate, may help to explain why these investors look set to be the most active. South Korea-based Samsung Fire & Marine Insurance is one such investor.; it is looking to invest in domestic and international private real estate funds employing core and core-plus strategies. It is particularly interested in funds targeting the US, the UK, France, Germany, Japan or Australia.
The ongoing volatility and sovereign debt crisis in Europe appears to be impacting investor confidence in this region, as demonstrated by only 37% of investors expecting to invest in the real estate asset class in the next 12 months. Many institutional investors in this region are reducing their capital outlay to the asset class, with some halting investments altogether. A number of North America-based investors remain cautious about allocating capital to the asset class in the next 12 months; only 40% of investors from this region are seeking to commit capital to real estate vehicles over this period as uncertainty in the asset class continues.
Larger investors are more likely to commit capital to private real estate funds in the next 12 months. Seventy percent of investors with $10bn or more in total assets are seeking to invest in real estate funds during this period, compared to 41% of investors with total assets of $1-9.9bn. Just 28% of institutions with less than $1bn in assets plan to make commitments in the next 12 months. Smaller institutions typically make investments less frequently and some investors will also be halting commitments due to market conditions.