Real estate fund managers are split between a cohort that believes environmental, social and governance requirements will drive capital outflows, and those who believe they will instead encourage inflows.
Some 52% of 100 investors surveyed by Auxadi, a provider of accountancy and payroll services to real estate investors, expect a fall in capital held in private equity real estate funds over the next five years due to managers struggling to meet ESG requirements in their investment processes.
Meanwhile, 44% said assets under management will grow as managers improve their sustainability credentials.
Auxadi’s survey drew together responses from 100 investors from the UK, Europe and North America with average assets under management of €14.2bn (£12.4bn).
Rima Yousfan, head of funds at Auxadi, said: “Real estate managers have clear net zero commitments, but will face some significant hurdles in retrofitting existing assets and ensuring newly built ones are zero carbon across their lifecycle.
“This research suggests a bifurcation between those that are confident in the progress being made and those who feel that solutions have so for remained elusive. Investors are increasingly likely to vote with their feet and back those managers that are demonstrating their ability to invest in solutions and implementing successful measures to move to net zero.”
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