UK-Based Investors in Private Real Estate Funds

by Forena Akthar

  • 23 Jun 2010
  • PE
  • RE

UK institutions are an important source of capital for real estate managers both on a domestic and international basis. In 2010, they account for 10% of all investors worldwide by number. A considerable proportion of such investors are pension funds: 38% are public pension funds and 21% are private pension plans. 8% are real estate fund of funds managers. Real estate fund managers that commit some of their own, or their client’s capital to third-party funds, account for 6% of UK investors. 15% are other types of institutional investors, such as banks and investment companies.

UK-based institutions will invest across the risk/return spectrum, although the most targeted strategies by these investors are value added and opportunistic. This is consistent with the entire real estate investor universe. There is also a strong preference for low-risk open-ended core funds, with 31% allocating to such vehicles. 30% seek fund of funds vehicles; these investors may not have the resources to diversify their portfolios through a series of direct fund commitments.

In terms of location preferences, 96% of UK-based investors allocate to European funds, and 31% have a preference for funds focusing on North America. The proportion of investors interested in Asia and Rest of World (38%) is slightly higher than the proportion interested in North America. This suggests that investors from the UK are keen to gain exposure to emerging markets.

More information on private equity real estate investors is available on Preqin's online product, Real Estate Online.


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