Capital raised for European non-listed funds up 54% in 2014 - INREV

Some €28.1 bn in capital was raised for European non-listed real estate investment in 2014, up 54.1% on the year-earlier period, according to research published by non-listed funds body INREV.

The 2014 figure almost matches the peak of €29.6 bn achieved in 2007 and reflects the continued strong investor appetite for European non-listed real estate vehicles, INREV said.

Total capital raised for non-listed real estate investment on a global basis hit €122.7 bn in 2014, representing a 27.5% increase on the €96.2 bn raised in 2013.

Over half (55.3%) of the total equity raised was committed to non-listed real estate vehicles with a European strategy.

Non-listed real estate funds and separate accounts made up 79.8% of total equity raised, while non-listed debt products continued to attract more capital, accounting for 11.9% of the total raised - up from 9% in 2013.

The bulk (72.6%) of the total equity was for core strategies with only 5.2% going to funds with leverage in excess of 60%. These figures suggest that the new equity will likely remain invested in the non-listed real estate market for the long term and that investors are adopting a cautious approach to investing.

Nearly nine out of 10 (88.6%) fund managers who participated in the survey said they expected the increase in capital-raising activities to continue over the next two years, further underlining investor confidence in the asset class, but also raising questions about whether the market will reach a new peak.

'These figures point to investor confidence in the European real estate sector in general, and a clear interest in non-listed real estate vehicles in particular. The majority of capital raised in 2014 was for core strategies and funds with low leverage, indicating that investors and fund managers are conscious of where we are in the cycle and that interest rates will rise. There is an increased emphasis on long-term investing in this sector, with less focus on riding the cycle, which will ultimately stabilise the markets,' said Henri Vuong, INREV’s director of research and market information.