Investors plough bulk of money into non-listed funds

Joint ventures and separate mandates may be gaining favour as targeted investment vehicles among institutional investors in their search for greater control, but the vast majority still put their money into non-listed funds, according to a new survey by INREV in cooperation with its Asian counterpart ANREV.

Separate mandates investing both directly and indirectly into real estate account for slightly over a fifth - or 20.2% - of the total assets under management in the global property industry, the survey found. Including joint ventures, the figure comes to just 23.5%. By contrast, non-listed real estate funds account for 56.3% of the total. Real estate securities funds account for 7.8% while the category ‘other’ which mainly includes listed real estate funds accounts for 9.8%.

The findings are based on a survey of 122 fund managers with total real estate AUM of EUR 1.26 tln.

‘Non-listed real estate funds are still a very big business,’ commented Casper Hesp, research director at INREV. ‘I don’t see that changing all that quickly. Joint ventures and separate accounts are often less transparent from a market perspective,’ he added.

Earlier this year, the annual INREV Investor Intentions survey found that 39% of investors expected to increase their allocations to joint ventures, down from 67% the previous year. In practice, however, just over 3% of investments in non-listed real estate are tied up in joint ventures, the fund manager survey found. About 12% of investors said they aimed to increase their allocations to separate accounts, with German investors targeting a significantly higher figure of almost 40%.

The survey also found that that the Blackstone Group is the largest fund manager for direct real estate vehicles globally with a total value of EUR 52.7 bn, all of which is held in real estate funds. Other larger managers such as Morgan Stanley and CBRE Global Investors also have large direct portfolios but significant parts of the total AUM is in indirect property such as securities. Overall, direct real estate vehicles account for EUR 1 tln - or 80% - of total real estate AUM worldwide.

The largest non-listed real estate fund manager of European funds is CBRE Global Investors with EUR 18.6 bn under management. In Asia Pacific, this is AMP Capital with EUR 9.4 bn while in North America the number one player in funds is JP Morgan Asset Management at EUR 21.9 bn. For funds with a global investment strategy, the Blackstone Group is the largest player at EUR 25.9 bn.

INREV is the organisation for non-listed real estate vehicles in Europe.