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Alternative Market Briefing

Investors remain satisfied with recent performance of real estate

Thursday, September 12, 2019

Laxman Pai, Opalesque Asia:

Investors remain satisfied with the recent performance of real estate, but also hesitate on future commitments to the asset class as they feel that asset valuations will depress future returns

The Preqin Investor Update: Alternative Assets H2 2019 finds that the outlook for real estate over the coming year is more challenging.

"Investors are largely pleased with the asset class's performance over the past 12 months, with 83% saying that returns have met or exceeded their expectations," said the report.

But future prospects are less certain, and 23% of investors believe that returns in the coming 12 months will decline - the highest proportion of any asset class.

This is likely due to high asset valuations putting pressure on pricing, as 29% of investors say that assets are overvalued and expect a pricing correction in 2020.

Real estate asset valuations is biggest challenge to future returns

Four out of five investors ranked asset valuations as the biggest challenge to future returns, followed by high competition for assets. In response to this, more than a quarter of investors expect to place less capital in the asset class than they did in the previous 12 months.

Justin Hall, Real Estate Product Manager said: "The real estate market is facing a challenging moment. With so many active firms in the market, and so much capital waiting to be put to work, prices have risen to record levels. This is ma......................

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