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Alternative Market Briefing

Real estate AUM set to rise to $1.83tn by 2026

Monday, January 24, 2022

Laxman Pai, Opalesque Asia:

Global real estate assets under management (AUM) will grow from $1.3tn in 2021 to $1.83tn by December 2026, said a study.

While fundraising is unlikely to hit the heights of 2019 ($188bn), a resurgence in activity during Q4 enabled 2021's total to come close, with $176.8bn raised, according to the 2022 Global Real Estate Report published by Preqin.

"After a challenging year for real estate during 2020, 2021 proved to be a year of consolidation. A slow start to the year did not stop the asset class from a marked improvement in Q4," it said.

Value-added strategies raised $53.1bn during 2021, accounting for 30% of all real estate fundraising, as investors appeared to focus on strategies where capital could be more readily deployed. Opportunistic strategies experienced a busy Q4, leading to year-end fundraising of $54.3bn for the strategy in 2021, equal to 31% of the annual total.

The Preqin report also found that real estate deal values remain weak, compared to previous years. The annualized $278bn in aggregate deal values during 2021 is 40% down on the 2019 peak of $464bn.

Portfolio deals remained attractive for both buyers and sellers, accounting for six of the year's 10 largest deals - the largest a $6.8bn acquisition of a US industrial portfolio. Although the industrial sector has experienced a well-publicized period of strength, Preqin forecasts a recovery in demand for retail assets during 2022.

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