Managers of non-listed real estate funds in Europe raised €5.9 billion last year, a drop of 60 percent on the amount raised in 2008, according to INREV, the European association for investors in non-listed real estate.
INREV said that while the figure was markedly down, it “masked” the work that fund managers were putting in to forming new investment vehicles.
“The figures reflect a challenging year for capital raising but what they do not show is a change in activity of fund managers to regroup and launch funds that are in line with investors’ needs following the downturn,” Lonneke Lowik, director of research and market information at INREV, said.
“Fund managers and investors have been engaged in due diligence for new funds and we expect to see the fruits of that in 2010.”
INREV predicted fund raising for non-listed real estate funds to reach €10.9 billion in 2010 as due diligence undertaken by both fund managers and investors in 2009 leads to an increase in capital commitments.
Core funds accounted for 87 percent of total capital raised in 2009 as many investors became risk adverse and steered clear of opportunistic strategies – indeed opportunity funds accounted for just 4 percent.
Lowik said: “We expect investors to remain risk averse and this is reflected in the fact that core funds remain the preferred style for 2010. Just over half of the capital raised is expected to be allocated to this style.”
He added that investors were keen to partner with fund managers boasting track records. This was underlined by the fact that 64 percent of commitments were from “repeat” investors. Of the investor types, pension funds remained the most dominant investors, representing 54 percent of all capital raised.