EUROPE - New research shows real estate investors and fund managers agree the biggest challenge in 2012 will be raising new capital but also highlights disparity over other key fundraising issues.
INREV's annual Investment Intentions Survey found that 'the ability to raise capital' was deemed to be one of the 'most challenging obstacles for fund managers of non-listed real estate funds in the next 12 months' by 63% of investors and 69% of managers.
But the study also revealed that investors were significantly more concerned than fund managers about the ability of funds to secure financing and to achieve target returns.
Securing financing and meeting target returns were identified as major obstacles by more than half of investors, but only approximately one-fifth of fund managers were concerned.
The findings were launched at the INREV UK Winter Seminar in London on Tuesday.
Presenting the results, Joe Valente, managing director at JP Morgan Asset Management, said the divergent results were telling and showed that investors did not always believe fund managers could achieve the return expectations they were marketing.
Valente also highlighted the fact that manager track record and fund style were the most important criteria for investors when selecting funds. Fund managers also identified these factors as the most important.
Another surprise finding was a reduction in interest in joint ventures and club deals among investors.
The previous survey showed investors wanted more control over their investments, resulting in 67% expecting to increase their allocations to joint ventures and club deals.
But this figure has dropped back substantially in 2012 to 39%, which is comparable with the 2010 results.
However, as only 3% of investors expect allocations to fall, this means a net increase of 36% for joint ventures and club deals.
This year's survey also asked respondents about separate accounts for the first time and showed that 15% of investors expected to increase their allocations to this investment structure.
Valente noted that the findings showed that joint ventures were not necessarily a panacea for real estate investors' problems and that there would continue to be a role for traditional funds.
Neil Harris, head of asset management for Europe at GIC Real Estate, agreed with Valente and told INREV delegates that the Singapore sovereign wealth fund would continue to invest in funds in the future in some capacity.
Harris acknowledged that investors were increasingly looking for more control, but he said this should be achieved through "defined strategies" that give managers investment discretion with a clear framework.
One of the overriding themes of the Investment Intentions report was the widespread risk aversion playing out among investors.
The Nordic and German property markets were identified as the most preferred locations, while core fund strategies were similarly top of the list.