The world’s 500 biggest fund managers saw a 13.2% decline in real estate assets under management in 2015, according to research by Willis Towers Watson.
It was the biggest fall of any sector as total AUM dropped 1.7% to $76.7tn (£63.1tn) – the first fall since 2011.
Assets managed by UK-based firms fell by 2% to $6.6tn, while European asset managers as a whole saw a fall of 3.3%.
While traditional equity and fixed-income assets fell by 7.1%, alternative assets grew by 25.1%.
Luba Nikulina, global head of manager research at Willis Towers Watson, said: “The increase in alternative assets shows that in an environment of low returns and increased uncertainty, investors are under pressure to identify other means of achieving more diversity and higher returns.
“This shift in strategy is both welcome and essential if the investment industry is to adapt to meet its current and future challenges.”
BlackRock was the biggest fund manager with $4.6tn in total assets, while the biggest UK-based fund manager was Legal & General with $1.1tn in AUM.
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