Investors positive on private equity real estate

Almost 50% of investors intend to increase exposure to private equity real estate over the next 12 months, a new survey by consultancy Preqin Real Estate has found. A total of 54% of investors who took part in the survey intend to maintain their exposure to private equity real estate despite the uncertainties created by the credit crunch. ‘Not a single investor surveyed intended to decrease the allocation in the near future,’ London and New York-based Preqin said.

Investors were asked in the survey whether the credit crunch had affected their strategy in any way. Preqin said the results showed that on the whole the credit crunch has not had a major effect, with 88% reporting no change to strategy and fund preference, and only 12% saying that it had altered their strategy.

Amongst those reporting no change in strategy, a number stated that although their plans would remain the same, they would however be exercising a higher degree of caution when making new commitments, and taking more time when considering new opportunities. A prominent US insurance company said that they would be ‘adopting a slightly more conservative approach because of the credit crunch.’

Amongst those that reported a change in strategy, this was universally to focus on different regions or fund types. Investors are continuing to invest in the asset class, but in some cases are looking to invest in different funds and regions, with many actively seeking to take advantage of the market conditions that the credit crunch has created.

'Increased investor caution in the early stages of 2008 has been reflected in the amount of funds reaching a final close. As of February 2008 we have seen 12 private equity real estate funds reach a final close raising an aggregate $6.3 bn (approx EUR 3.9 bn), Preqin said.

Click on the link below to read Outflow from Uk property funds slows