Europe-focused real estate funds raised $33 bn (€26.5 bn) between January and November 2014, a rise of 153% compared to the €13 bn raised in 2013, according to figures from Preqin, the alternative assets data company.
Europe-focused real estate funds raised $33 bn (€26.5 bn) between January and November 2014, a rise of 153% compared to the €13 bn raised in 2013, according to figures from Preqin, the alternative assets data company.
Overall, private equity funds raised $77 bn globally in 2014 (as of 21 November 2014), just shy of the $80 bn raised between January and November 2013. The amount of uncalled capital available for investment now stands at $221 bn, which is a record high, Preqin said.
'2014 has seen a notable rise in the amount of assets managed by the private real estate industry,' noted Andrew Moylan, head of real assets products at Preqin. 'This increase in private real estate fund managers’ portfolios can be attributed to the improving real estate valuations and increased investment activity by these firms. Preqin has witnessed the average net value of assets held by fund managers increase in every quarter over the past three years. As a result, performance for the asset class has been strong over recent years, as demonstrated by the growth in the PrEQIn Real Estate Index.'
The improvement in fundraising in recent quarters also means that fund managers now have large amounts of dry powder available to make new investments, he added. 'Capital distributions to investors also reached an all-time high in 2013 at $138 bn. This is more than double the amount returned to investors in 2012, and indicates that many managers have seen recent quarters as a good time to sell assets. The return of previously tied-up capital to investors may prove positive for private real estate fundraising in future months, as investors look to re-invest the capital in new real estate funds.”
US alternative assets giant raised the largest Europe-focused fund this year, its €7.2 bn Real Estate Partners Europe IV. Other big funds with a European focus include Lone Star Fund IX ($7.2 bn); Pimco Bravo Fund II ($5.5 bn); and Kildare European Partners I ($2 bn). Just under two thirds - or 63% - of the Europe-focused funds closed on or above target in 2014.
The proportion of investors targeting European real estate in the next 12 months has risen to 36% from 27% in November 2013, Preqin said. About 45% of investors are now targeting opportunistic private real estate funds in the next 12 months, up from 40% in November 2013.
Investors’ average target allocation to real estate is also up at 9.6%, compared to an average current allocation of 7.6%.