GLOBAL - Most real estate investors favour joint ventures and club deals over pooled funds and believe the fund management industry is undergoing a structural shift, according to a new study revealed at MIPIM.

The survey carried out by KPMG shows 87% of investors believe the ability to raise capital for 'blind pool' property funds will remain constrained for a number of years and is not a short-term phenomenon.

When asked if club deals and joint ventures would become established as the principal means of gaining real estate exposure over the next five years, 80% of respondents agreed.

The results were revealed at RE-Invest, a summit for leading institutional investors held for the first time at MIPIM, the annual real estate convention in Cannes.

The event brought together pension funds, sovereign wealth funds and insurance companies from Europe, Asia and North America to real estate investment issues identified by IP Real Estate.

Delegates at the summit also learned that direct holdings and separate account mandates were the most attractive investment approach in today's market environment.

Fifty percent of survey respondents selected this option, 40% selected club deals and joint ventures, 5% chose pooled funds and 5% chose listed property and real estate investment trusts (REITs), while none chose fund of funds/multi-manager mandates.

These numbers were different to those for existing investments, highlighting a shift in investment approach: 32% of investors currently had direct holdings and separate account mandates; 32% club funds and joint ventures; 22% pooled funds; 14% listed property and REITs; 0% fund of funds/multi-manager mandates.

When asked what was most important when looking for new real estate investments, respondents were fairly evenly split between 'focused investment strategy' (26%), 'manager/partner track record' (26%) and 'geography/sector' (24%).

'Level of control/discretion' and 'alignment of interest' were seen as less important at 15% and 9%, respectively.

The survey also revealed an enduring interest in core real estate, despite investors acknowledging the challenge of finding value in European prime at current prices.

Core real estate was identified as offering the best investment opportunities by 37% of investors, while real estate debt came in second with 26% of investors.

But the majority of investors (54%) agreed that core real estate in Europe was generally over-priced and offered limited buying opportunities.

The vast majority (87%) believed debt strategies would become a much more significant part of institutional real estate portfolios in future.

Fund and portfolio recapitalisations were identified by 21% of investors, while emerging markets appealed to 16% of investors. No respondents selected listed property and REITs.

Office was seen as the most attractive European sector for 2012 by 37% of investors, while retail was identified by 32%.

Alternative sectors, such as student accommodation and social infrastructure, were also popular among 21% of survey respondents, with residential attracting 11% of investors and logistics 0%.

The research conducted by KPMG was used to help foster debate among some of the world's largest real estate investors at the RE-Invest summit.

Discussion themes included the benefits and risks of joint ventures and club deals, getting the right balance between manager discretion and investor control, and identifying the best investment opportunities in Europe.

Investor participants included GIC Real Estate, Stichting Philips Pensioenfonds, Teacher Retirement System of Texas, Samsung Life Insurance and the First National Swedish Pension Fund (AP1).

The event was moderated by Richard Lowe, editor of IP Real Estate; Gunnar Branson, chief executive at NAREIM; Jeremy Stewardson, executive director at ANREV; Jonathan Thompson, head of global real estate at KPMG; and Erwan Quintin, professor at the Wisconsin School of Business.

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