GLOBAL - More than 80% of institutional investors will increase their allocations to non-listed property funds in 2008, with the remainder retaining their current holdings.
An INREV poll of 112 investors and fund managers - conducted for the organisation's annual investor intentions report - found widespread appetite for vehicles investors believe will be able to capitalise on the current credit squeeze.
A time-lag in the survey, which was conducted in September 2006, may have led to investors underestimating the impact of the credit situation. However, INREV research director Andrea Carpenter said the subsequent squeeze has likely encouraged investors to boost allocations to private funds.
"We did the survey just as it was starting. There were some indications but not the feeling you have now," she said. "I'd be confident that the allocation will remain the same - if it doesn't increase. There's a good long-term outlook."
Of the three investment styles associated with non-listed funds - core, value-added and opportunistic - opportunistic funds have seem some attrition as a result of higher levels of gearing.
"A fund manager can actively manage [value-added funds] through uncertainty," said Carpenter. "There's a lower financial risk than with opportunistic funds."
She said tightening credit had encouraged investors to up their expectations of fund managers, who "are now judged more on their track records and performance. But investors are also concerned about corporate governance. They want to be comfortable with you as a fund manager and they don't want to fight through different reporting systems."
INREV launched its guidelines on management fees for private property funds in September last year.