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INREV: Fundraising surge continues

The total capital raised for non-listed real estate investment on a global basis hit €122.7 billion in 2014 and more increases are expected over the next two years, according to a report from the industry association.

Global fundraising for non-listed real estate reached €122.7 billion in 2014, a 27.5 percent increase on the €96.2 billion raised in 2013, a European Association for Investors in Non-listed Real Estate Vehicles’ (INREV) study said.

The trade association’s annual study also revealed that more than half – 55.3 percent – of the total equity raised was committed to European strategies, and the €28.1 billion raised specifically for European funds was 54.1 percent higher than in 2013, almost matching the peak of €29.6 billion achieved in 2007.

“These figures point to investor confidence in the European real estate sector in general, and a clear interest in non-listed real estate vehicles in particular,” commented Henri Vuong, INREV’s director of research and market information.

Fund managers are also bullish about fundraising too with nearly nine out of ten, or 88.6 percent, of fund managers which participated in the study said they expected the increase in capital raising activities to continue over the next two years.

The majority – 72.6 percent – raised was for core strategies with only 5.2 percent going to funds with leverage in excess of 60 percent. The association said 13.7 percent was raised for opportunity funds.

“The majority of capital raised in 2014 was for core strategies and funds with low leverage, indicating that investors and fund managers are conscious of where we are in the cycle and that interest rates will rise,” added Vuong.

Non-listed real estate debt products also garnered more capital than previously, accounting for 11.9 percent of the total raised up from 9 percent in 2013.

The study comes just days after a survey from placement agent Probitas Partners revealed that 86 percent of investors fear that too much money is flooding into real estate, driving down returns while adding risk. The Probitas survey also showed that investors’ next biggest fear is that real estate is “nearing another cyclical market high point”, with 52 percent of respondents selecting it as a major concern.