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Alternative Market Briefing

Investor interests in real estate funds waning, says Preqin

Friday, August 30, 2019

Laxman Pai, Opalesque Asia:

Investor commitments to real estate funds may decline over the next 12 months, as more than a quarter (27%) of surveyed investors expect to place less capital in the asset class than they did in the previous 12 months, said Preqin.

As distributions fall yet further, investors may feel the need to scale back the pace of new commitments, said Preqin in its investor update for H2 2019.

As with other private capital asset classes, asset valuations rank as the biggest challenge for return generation among real estate investors (cited by 82%).

Competition for assets is a challenge for 52% of investors; with so many active firms in the market with capital to put to work, and with prices at record levels, it is harder than ever for fund managers to find assets they can add value to.

Value-added funds remain the most sought-after strategy among real estate investors, and 46% feel they currently offer attractive investment opportunities.

Investor appetite for opportunistic funds is on the rise again having dropped off over the past year: 44% of investors are planning to target the strategy in the next 12 months, up from 20% in June 2018 and 29% in December 2018.

As with previous years, the established markets of the US and Western Europe (excluding the UK) are viewed most favorably among investors: 57% and 52% believe they are presenting the best opportunities at present.

Emerging Asia is the clear favorite among real estate i......................

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