GLOBAL - Institutional investors believe the concessions they have rung from private equity real estate managers in the past year represent a permanent change in the balance of power, according to private equity data firm Preqin.

In a survey of 50 institutional investors carried out last month, more than 80% reported a shift in the balance of power toward investors during negotiations over fund terms.

Most respondents were optimistic the changes witnessed would be long term, while than 50% said the new terms and conditions would last.

Yet the survey revealed lingering dissatisfaction among institutional investors with terms offered by new and existing fund managers.

Compared with 69% of institutional investors who thought fund managers' interests were aligned with their own in 2009, only 58% believe they are now.

The prime focus of discontent remained fees, with 64% dissatisfied with their level and structure.

Preqin's analysis of fund terms over the past year on the most recently launched private equity vehicles showed a mean management fee for new real estate funds seeking upward of $1bn (€0.8bn) in total commitments was down 50 basis points from its 2007 peak of 1.25%.

Sam Meakin, who worked on the survey, said: "We're hearing some stories of investors with large amounts of capital invested in separate accounts bringing down annual fees significantly - CalPERs is one of them. But it depends on the size of the LP.

"Where the pressure will come is in new fund investments, though some are renegotiating existing relationships because fundraising has been so slow in the past year or two.

"The pressure is on GPs because there isn't as much capital out there as there was.

"The figures we're looking at now suggest fundraising will improve slowly, but the pressure will be there for a while yet."