Half of investors to commit to private equity RE funds – Preqin

GLOBAL - Almost half of investors plan to up their commitments to real estate private equity over the next six months - up from 36% in January, according to a survey by Preqin.

Interviews with more than 100 institutional investors - more than 40% of them public and private pension funds - revealed another 17% remained undecided, with only 36% declaring themselves unlikely to commit to private real estate funds, compared with more than 50% in January.

"Current trends suggest increasing investor appetite, which could lead to increasing momentum in the private real estate fundraising market," Preqin said.

A regional breakdown showed significantly stronger appetite for private real estate among North American investors.

Of these, 69% said they had committed to funds in the previous 12 months, compared with 76% of Asian investors and 27% of European investors.

However, when it came to intention to invest, 72% of Asian investors said they were likely to commit private funds over the next 12 months, compared with 47% of North American and 32% of European investors, respectively.

Investors with more than $10bn (€8bn) in assets under management were more likely to have committed capital to private funds in the past 12 months, compared with smaller institutions that were more likely to be deterred by market conditions.

Pari passu 70% of large investors said they were more likely to invest, compared with 26% of investors with fewer than $1bn in assets under management.

Just over a fifth of investors had committed capital in the past 12 months to five or more funds, and 14% invested in three or four funds.

Most investors - 65% - limited their investments to one or two funds.

Yet only 10% of those intending to invest were considering commitments to five or more funds.

More than half would-be investors had not set a fund target for their investment, and 27% expected to commit capital to one or two funds.

Of the 100 investors polled, 32% had neither committed capital to private funds over the past 12 months nor had any intention of doing so in the next.