Total global real estate assets under management (AUM) reached €3.8 trn in 2022, second only to the 2021 year-end record high of €4.1 trn, according to new data from ANREV, INREV and NCREIF.
The Fund Manager Survey 2023 highlights continued growth with the average AUM for each manager reaching €32.8 bn at 2022 year-end, a notable increase on the €28.7 bn average reported for 2021.
Meanwhile, the top three global fund managers remain as they were in 2021, though individual AUM increased substantially.
Blackstone leads the field (€475 bn), followed by Brookfield Asset Management (€246 bn) and Prologis (€183 bn) in third position. Nuveen (€145 bn) moved up from fifth to fourth place, while MetLife Investment (€138 bn) claimed the fifth spot – replacing PGIM which moved to eighth position.
Top ten rankings shift
UBS and GLP – present in the top 10 global list in 2021 – gave way to new entrants, ESR (€133 bn) in sixth position, and Starwood Capital (€110 bn) in tenth place. CBRE Investment Management (€127 bn) and AXA IM Alts (€120 bn) are seventh and ninth, respectively.
In Europe, there was also no change in the top three fund managers, though the running order has shifted. AXA IM took the top spot with AUM of €90 bn – a €7.5 bn increase from 2021 – followed by Swiss Life (€89 bn) in second position, and Blackstone (€88 bn) in third place.
Europe’s three leading fund managers have a combined AUM of €266.9 bn, almost on a par with the remaining seven managers in the top 10 who account for a collective €321.3 bn.
Having dropped out of the top 10 in 2021 CBRE re-entered the list in fourth place in 2022. The rest of the list consists of Deka Immobilien Investment (fifth), UBS (sixth), Patrizia (seventh), Credit Suisse Asset Management, (eighth), Syntrus Achmea Real Estate & Finance (ninth), and DWS (tenth).
Acculmulation of capital
The ongoing trend of high concentration has also been confirmed, with 81% of this year’s total AUM (€3.1 trn) concentrated within the top quartile by number of fund managers, demonstrating a clear accumulation of capital within the larger fund managers globally.
The total AUM of the top 10 managers globally exceeded €1.8 trn AUM, compared with €1.7 trn a year earlier. This accounts for 47% of the total global AUM, up from 41% in 2021.
This trend can also be seen through merger and acquisition actitivites over the past years. In 2022, approximately 15% of respondents were involved in mergers (18% in 2021). Furthermore, 22% were involved in acquisitions – a significant uptick from the 12% in 2021.
The trend is especially notable in Asia Pacific where 25% of respondents were involved in mergers in both 2021 and 2022, and 33% were involved in acquistions in 2022, marking a threefold increase from the 11% reported for 2021.
Europe is the only region where respondents were not involved in merger activities in 2022, however, this number increases to 20% when looking at acquisitions, which is on a par with the 2021 results.
The value of dry powder stood at €215 bn, slightly up from the €214 bn recorded the previous year. The latest results represent 7.9% of the total global fund manager AUM. Once again, most of the dry powder – €167 bn – is concentrated in the hands of the largest fund managers in the upper quartile. In 2021, the equivalent value of dry powder amounted to €153 bn.
Asia Pacific investors continued to expand their international presence, increasing their share in North America and Europe to 15.4% and 7.9%, respectively. ESR moving into the top 10 global fund managers is a clear example of this, the research said.
Iryna Pylypchuk, INREV’s director of research and market information, said: ‘The latest results reveal a moderate decline of total global real estate assets under management as falling values offset capital raising activity.
'At the same time, significant quantities of dry powder (€215 bn) could trigger quick turnaround in new capital deployment, but what stands out the most is the pull of capital towards the largest managers, which is even more evident than in the recent past. And the rise of corporate actions, especially acquisitions, is equally telling.
‘With the 2023 capital raising survey highlighting the rise of Asia Pacific investors as the primary source of new capital for real estate globally – and ESR entering the global top 10 fund managers – it will be interesting to observe the extent to which Asia Pacific investors take advantage of opportunities currently available on the global playing field.’
Global changes
On a global scale, pension funds continue to account for the largest share of capital into non-listed real estate (40.9%). Insurance companies are the second most significant source of capital at 17.3% – though down from 19.3% at the end of 2021.
Overall, sovereign wealth funds increased their global share of capital from 6.7% in 2021 to 9.4% in 2022, heavily influenced by Asia Pacific investors. At 21.7%, they were the second largest source of capital into non-listed real estate for Asia Pacific strategies.
Core is the dominant style for all three regions, except for the global strategies where opportunistic strategy dominates. European and North American strategies are heavily focused on a core style. In Asia Pacific, there is more balance between core strategies and those with higher risk. Here, value added and opportunistic allocations combined accounted for 41.3% at the end of 2022.
Most of the capital allocated to non-listed real estate funds is focused on open end vehicles, which goes hand in hand with allocations to core. Typically, the open end structure offers more diversification and a higher degree of liquidity.
Open end vehicles account for 80%, 60% and 40% of total capital allocated to non-listed real estate in North America, Europe and Asia Pacific, respectively.
