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Wealth Managers Investing in Real Estate - May 2013

by Claire McNeil

  • 21 May 2013
  • RE

Preqin's Real Estate Online service currently tracks more than 290 wealth managers actively investing in real estate. The majority (59%) of wealth managers investing in real estate are based in North America, which is unsurprising given the scale of the wealth management industry in North America relative to other regions. Just over a quarter (26%) of wealth managers active in the asset class are based in Europe, with the remaining 16% based in Asia and other regions outside North America and Europe.

Forty-six percent of wealth managers prefer to invest in real estate on a global basis. This preference is likely held with an opportunistic view, as well as in order to diversify client holdings and tailor specific investments to the needs of each client. Given the turmoil in European and American real estate markets during the onset of the recent financial crisis, it makes sense for wealth managers to seek to diversify client real estate holdings, in order to absorb the excess returns offered by the asset class, whilst minimizing the risk involved by investing in a variety of real estate markets.

Sixty-two percent of wealth managers active in the real estate space have a preference for investing in North America, similar to the proportion that had this preference in January 2013 (63%).

However, interest in investing in regions outside North America is on the rise among wealth managers investing in real estate. Europe has become increasingly attractive to wealth managers since the beginning of 2013, with the proportion of wealth managers preferring the region when investing in real estate increasing from 28% in January 2013 to 58% currently. Twenty-nine percent of wealth managers have a preference for investing in real estate in Asia and other regions outside North America and Europe, an increase from the 12% that had this preference in January 2013.

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