Fundraising by real estate investment managers reached a pre-pandemic record high in 2021 but the conflict in Ukraine will put additional pressure on deployment strategies in 2022, according to an annual survey by real estate fund associations ANREV, INREV and NCREIF.
Capital raising activity in 2021 reached at least €254bn globally for non-listed real estate investment, a 107% increase on the €123bn recorded in 2020. The latest figure also exceeds the pre-pandemic record of €196bn in 2019.
More than three quarters (76%) of managers expect an increase in capital raising activity over the next two years – although the timing of the survey makes it difficult to assess the extent to which participants took the invasion of Ukraine into account.
The capital raised for regional strategies was up in 2021 with North America getting €90bn, compared with €29bn in 2020. The Asia Pacific increased by 61% and global strategies rose three-fold during the period compared with the year before. In Europe, the total capital raised for non-listed vehicles during the period amounted to €73bn compared with the €51bn raised in 2020.
Of the total capital raised, a record 56% was for non-listed funds, ”maintaining their position as the most popular route” to invest in real estate globally, according to the survey.
For the first time since 2017, the share of capital raising activity for funds that follow a multi-country and multi-sector strategy declined, however, they still raised more than half (51%) of the total new capital targeting European strategies in 2021.
According to the survey, the majority of capital raised for European strategies was earmarked for vehicles with a low-risk strategy.
Out of the €55.4bn raised in total, 72% was destined for core equity or senior debt strategies. While out of the €43.7bn raised for vehicles investing in equity, €30.8bn targeted core strategies. Value-added equity strategies attracted €8.6bn of capital in 2021, while opportunistic equity strategies bagged a total of €4.3bn.
Iryna Pylypchuk, INREV’s director of research and market information, said: “The uptick in capital raising activity in 2021 reflects the pent-up demand accumulated during the most restrictive period of Covid-19 lockdowns and a surge in investor appetite for the asset class.
“These results indicate a positive outlook for the real estate investment industry, notwithstanding the challenges the investment managers have been facing in terms of capital deployment, with almost half of capital raised in 2021 yet to be invested.
“And, complex geopolitical, economic and inflationary outlook will put additional pressure on decision-making and deployment strategies in 2022.”
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