Nearly $1.5tn (£1.1tn) has been allocated to real estate strategies by the world’s 100 largest alternative asset managers, according to Willis Towers Watson.
The firm’s Global Alternatives Survey captures long-term institutional investment trends by the seven main investor groups across 10 alternative asset classes.
It showed that, of the top 100 alternative investment managers, real estate managers have the largest share of assets, at 35%, and more than double the next largest group, direct private equity funds.
The research said that real estate markets have cooled in many areas around the world, but listed property companies broadly trade at long-run average levels relative to book value.
It said the UK market was however an exception, where the listed market appears to be more pessimistic relative to the unlisted market, due to potential impacts from the referendum.
Despite this, the amount invested in real estate strategies between 2015 and 2016 remained unchanged as a percentage of total investment, at 36%.
The research said in many regions around the world there is growing interest in alternative property sectors, such as healthcare, storage, student housing, or the private rented sector in the UK.
The survey said that while real estate in many regions looks attractive relative to bonds, investors should be patient and selective. The UK and US markets are at higher points in their real estate cycles and investors need to be cautious, especially those using high levels of debt.
It said greater defensiveness could be gained from certain property sectors, such as student assets, property healthcare, logistics, residential and storage.
Overall, alternative assets under management stand at just under $6.5tn across 562 entries, with North America the largest destination for alternative asset manager allocations, at 54%.
A third of alternative assets are invested in Europe and 8% in Asia Pacific, with 6% invested in the rest of the world.
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