The real estate asset class serves as an important component within the client portfolios of wealth management companies. Wealth managers utilize the asset class in the hope of achieving returns greater than those offered by more traditional asset classes, simultaneous to diversifying client holdings. Preqin currently tracks 361 wealth managers active in the alternatives space as of September 2012, 213 of which were active investors in the real estate asset class.
The majority of these active investors (62%) are based in North America, followed by 27% based in Europe and 11% based in Asia and Rest of World. In line with this, North America is also the most popular location for real estate investment from wealth managers. Of those investing in the asset class, 43% include North America within their geographic preferences. Europe and Asia and Rest of World appear to be less attractive regions to wealth managers, with 27% and 29% respectively including these regions as part of their geographic preferences for real estate investment.
The real estate preferences of wealth managers may adjust as economic conditions change over the next few years. Though Europe is currently less attractive to wealth managers investing in real estate than other regions, if its financial markets regain stability the region could possibly generate more interest from these investors in the future.