Signs of a slowdown in the real estate market are clear, but in The Banker’s 2008 real estate investment survey, Silvia Pavoni finds there are still good opportunities out there.
Current market conditions are proving challenging for any financial company and sector. The real estate market, however, has suffered one of the biggest hits. Until the beginning of last year, real estate was booming, with more and more products created and sold, and rising property values. But the market has slowed down with the spread of the credit crisis, particularly in the US and western Europe.
But not all is lost – good investment opportunities are still present in the market, as the real estate survey commissioned by The Banker from Property Funds Research shows. In our second poll, the survey targets real estate investment firms and their global investment activity. The survey covers a total of 107 fund managers, which between them hold a total of €1030bn in real estate assets under management, representing almost double the amount of last year’s poll.
The tables show the top fund managers by real estate assets under management, discretionary segregated mandates under management, indirect real estate investment vehicles under management and the number of vehicles launched in 2007. The research also includes indirect vehicles that are planned for launch this year.
Asset geography
The survey found that in the geographical distribution of real estate assets, Europe dominated, with more than 53%. North American and Australasian assets were in second and fourth positions (34.8% and 6.9% respectively). Fund manager domicile follows similar distributions: some 60.4% of managers surveyed are based in Europe, more than one-third in North America and 6.3% in Australasia. The geographical distribution of investors in the discretionary separate account mandates shows a high presence of European capital (68.3%). One-quarter of investors are domiciled in North America, while in third position are Asian investors, with a 3.2% presence in the mandates.
Investment intentions
The research highlights fund managers’ investment intentions in 2008. Derivatives, mezzanine finance, listed real estate funds and real estate investment trusts (REITs) remain among the most popular tools, although the last two suffered from minor corrections in 2007. In Europe, both direct investment in buildings and investment in unlisted real estate funds are indicated as products that managers want to use more in their portfolios.
The areas into which new real estate funds were launched differ from last year. Development and diversified funds attracted less interest this year, while other sectors, such as education, industrial, leisure, office and retail attracted more interest. Residential, in particular, is the area that fund managers looked at with more attention at the end of last year, with almost twice as many planned launches as of December.
