With a record number of funds on the road, and a smaller proportion of investors keen to make new commitments, conditions are set to remain tough for real estate managers, Preqin said in a recent research report.
With a record number of funds on the road, and a smaller proportion of investors keen to make new commitments, conditions are set to remain tough for real estate managers, Preqin said in a recent research report.
There are currently 454 funds in market seeking a combined $159 bn (EUR 119 bn), up from 403 funds targeting $138 bn at the same time last year. The number of investors planning to invest, meanwhile, has declined from 45% to just over one-third, meaning that the fundraising market will be extremely competitive.
Those managers raising their first fund are likely to find it even more difficult; with just 26% of investors wanting to invest in first-time funds.
Conversations between Preqin analysts and real estate investors over the course of November revealed that 41% of active investors plan to invest more in real estate in 2012 than they did in 2011. Another 29% anticipate investing less.
Interestingly, over half of the $158 bn of available dry powder is held by North America-focused funds.
'Fund managers will need to have an excellent marketing strategy if they are to succeed in this extremely competitive fundraising market. Many investors are delaying their commitments due to uncertainty,' said Andrew Moylan of Preqin. 'However, the high level of dry powder available to fund managers worldwide puts them in an excellent position to take advantage of investment opportunities in real estate markets worldwide.'
