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Investors continued to show strong interest in private real estate, despite uncertainty around interest rate movements, inflationary pressure and geopolitical issues. Private real estate allocations rose for all institutions, with the average allocation increasing from 7.21 percent in 2022 to 7.97 percent in 2023, according to PERE‘s Full Year 2023 Investor Report.
Indeed, investor appetite for the asset class remains robust for 2024. Thirty-nine percent of the investors planned to invest more capital in private real estate, roughly corresponding with the 38 percent of investors underallocated to real estate in 2023. On the other hand, while 38 percent of investors were overallocated in 2023, only 27 percent expected to invest less capital in 2024. Thirty-five percent of investors planned to keep their investment amount the same.
North American investors were most active known investors in private real estate last year. New York State Common Retirement Fund made the most known commitments in private equity real estate vehicles by investing in 19 funds in North America across a diverse range of strategies. Meanwhile, California Public Employees’ Retirement System was a winner in making the largest known commitments in private equity real estate closed-end funds in 2023. These included a $1.5 billion check to Blackstone’s Blackstone Real Estate Debt Strategies V and $1.15 billion to DigitalBridge’s proptech vehicle, DCP C Strategic Partners.
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