GLOBAL – Institutional investors' appetite for non-listed real estate funds is growing as pension funds, insurance companies and sovereign wealth funds grow more confident in the future direction of the market, a survey has revealed.
According to the latest capital-raising survey by the European Association for Investors in Non-listed Real Estate Funds (INREV), the real estate industry raised €29.5bn last year, with €11.5bn dedicated to non-listed funds alone.
INREV said fundraising for non-listed funds reached a record high last year and its highest level since 2008.
It said this was due to the fact investors think the market has reached its lowest point and are beginning to commit capital again.
INREV's survey also found that investors were increasingly willing to take risk, with opportunity funds and value-added funds raising 36.9% of the overall capital, an increase of 23 percentage points compared with last year.
The association said that, even though pension funds remain the largest investors across all products, sovereign wealth funds are strong allocators to separate accounts, as well as joint ventures and club deals.
"There is also a split by style, with pension funds and life insurance companies preferring core funds while sovereign wealth funds and high net worth individuals tend to be invested in opportunity and value-added funds," it said.
The survey also found out that European capital continues to dominate, accounting for 75.4% of capital raised for European, non-listed, closed-end real estate funds.
Among all investors, the Germans were the largest source of European equity in closed-end funds, followed by Nordic and Swiss investors.
Globally, French, German, Italian and Swiss investors were the most risk averse and assigned on average 92.4% of their capital to core funds, while the UK and Benelux investors committed the majority of their capital to value-added and opportunity funds.