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Strategies and Geographies Targeted by Private Real Estate Investors - October 2013

by Forena Akthar

  • 11 Oct 2013
  • RE

A recent study conducted by Preqin (the results of which are featured in Preqin Investor Outlook: Alternative Assets, H2 2013) found that institutional investor appetite for opportunistic funds has risen significantly since December 2012. A significant 54% of active investors will target opportunistic vehicles in the next 12 months, up from 44% in December 2012. Value added vehicles are sought by 51% of institutions in the coming 12 months. These figures are reflective of the shift in general investor sentiment towards a return to higher risk/return profile investments. Appetite for core funds has remained stable in recent years but investor interest in core-plus, debt and distressed real estate has decreased to levels seen in December 2011 after a peak in appetite in December 2012.

The proportion of investors based in North America and Europe that will invest in domestic markets is much higher than the proportion of Asian institutions that will allocate domestically. Sixty-nine percent of North America-based investors and 79% of Europe-based investors will commit to funds targeting their domestic markets, but only 44% of Asian organizations will seek domestic funds in the next 12 months. Due to changes in regulations allowing more Asia-based institutions to invest indirectly as well as internationally, a growing number of investors in the region are looking to overseas real estate in the coming year.

In terms of which regions investors view as the best investment opportunities for real estate funds, North America is thought to be presenting the best opportunities by a significant 71% of respondents. Only 30% of respondents felt that Europe was presenting the best opportunities, with Asia and emerging markets outside of Asia listed by 16% and 13% of investors respectively.

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