Fundraising for private real assets has almost tripled in the past decade, reaching $312 billion in 2021, up from $126 billion in 2011, data from PERE and Infrastructure Investor shows. As more investors carve out space in their portfolios for fixed income substitutes, real estate and infrastructure managers are successfully closing ever-larger funds – and finding ways to put capital to work in times of immense social, economic and political uncertainly.
But industry growth isn’t the only story here. More real estate firms are establishing infrastructure offerings in recognition of common goals and investment characteristics, a trend that’s increasingly visible in the rapidly growing ‘alternative’ arena, with assets such as life sciences properties and data centers blurring the boundaries between the two asset classes.
For many investors, who are acutely aware of the changing demands and priorities in our society, these up-and-coming sectors are no longer niche. Exposures are increasing, with real estate debt funds and listed equities also emerging as attractive avenues for exposure to such growth-oriented investments.
Spanning all markets and subsectors in real assets, however, are several key megatrends. To stand out from the crowd in this brave new world, managers are increasingly focusing on tenants and end users, investing in the transformational capabilities of leveraging big data and, of course, addressing ESG and the urgent need to decarbonize.
PERE joined forces with CBRE Investment Management to dissect the megatrends shaping both real estate and infrastructure.
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