GLOBAL - The rise of joint ventures and the future of real estate funds was one of the most hotly discussed topics at this year's MIPIM property convention in Cannes.

It was the central theme for RE-Invest, MIPIM's first ever summit for leading institutional investors, and was also debated at INREV's annual Cannes seminar.

The results of the RE-Invest discussions, which comprised a series of off-the-record roundtable discussions with sovereign wealth funds, pension funds and insurance companies, will be revealed in a report by the Wisconsin School of Business.

One roundtable chaired by IP Real Estate concluded there would be a role for real estate funds in future, and it was agreed that JVs and club funds were not a panacea for investors and came with their own risks.

That said, expectations were for the emergence of a two-tier market, whereby JVs and clubs became a permanent feature for larger investors alongside traditional funds.

Meanwhile, the INREV seminar revealed some optimism regarding the appeal of real estate funds among its audience of investors and fund managers.

In a live electronic poll, 36% of delegates said they expected non-listed funds to see the greatest increase in investor preference in next year's INREV Investment Intentions survey, compared with 20% for JVs and clubs.

The audience was also polled on the benefits and drawbacks of JVs. Control and alignment were cited as the principal advantages by 49% and 37%, respectively.

Necessary resources and exit management were cited as the main disadvantages by 41% and 31%, respectively.

INREV, the Association for Investors in Non-listed Real Estate Vehicles, itself adjusting to the growing prevalence of JVs and clubs, said it would produce a white paper on "the growing menu of non-listed products" to increase transparency in the market.

There was agreement among the guest speakers at the INREV seminar that JVs were nothing new in themselves and that traditional funds were likely to continue to play a role.

Stephen Tross, international investments director at Bouwinvest, said the Dutch pension asset manager did not favour a particular investment approach over another.

Bouwinvest has invested in JVs, clubs, closed-end funds, open-ended funds and listed property and has direct holdings in the Netherlands.

Tross said the institutional investor wanted "exposure to real estate, not exposure to JVs".

He said the pension fund would look at JVs and clubs in Europe, but would not consider them in markets in the Americas and Asia-Pacific, citing recent investments made in three Australian real estate funds.

Matthew Ryall, head of indirect real estate at Allianz Real Estate, said investors would not be able to develop the same level of diversification with JVs and club deals and therefore real estate funds would "come back".

But Ryall, who joined Allianz Real Estate in 2008 to help develop its indirect property exposure, said investors would be increasingly demanding of fund managers.

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