DOWNLOAD: Investors upped their real estate exposure in H1

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Real estate allocations for all institutions climbed in H1 2023, with an average increase of 76 basis points, according to PERE’s H1 2023 Investor Report. However, sovereign wealth funds had the largest percentage allocation increase among all institution types during the half-year period. Around 47 percent of the investor type added exposure to the asset class in H1 2023, followed by private pensions, with 43 percent dialing up their allocation.

Notably, sovereign wealth funds – whose average allocation to real estate had dropped from 9.82 percent in H1 2019 to 6.93 percent in H1 2022 – increased their allocation to 7.92 percent in H1 2023. This marked the investor group’s first allocation increase to the asset class in four years.

Although more than half of institutions maintained their overall allocations to real estate in H1 2023, 25 percent of investors increased their allocations while another quarter cut back on their exposure to the asset class.

For the first time, the report also examined the composition of private real estate investors by region and institution type. In terms of region, North America had the highest share of private real estate investors, home to 53 percent of institutions. The region also dominated among the investors making the top 15 known real estate fund commitments in H1 2023, accounting for all but one of the fund investments on the list.