The number of unlisted funds targeting property reached a post-crisis high last year, with 181 vehicles launched globally.
Research commissioned by the Association of Real Estate Funds found this was the highest level since 2008, when 227 funds were launched, following 2007’s peak of 317. The Property Funds Research review of 2,701 vehicles found that gross asset values are also rising, hitting €79bn (£64bn) last year.
However, this still lags behind the post-crisis high of €87bn in 2011.
Value-add was the most common strategy globally for the fourth consecutive year, with 70 vehicles launched.
Looking at quarterly equity raises by sector since 2012 shows a steady growth in cash targeting real estate, with an uptick in Q3 and Q4 to €29bn last year.
The lion’s share is going into diversified strategies, reaching €18.7bn in Q4, with debt funds also becoming more common.
UK lags rival regions
A geographic breakdown shows that in the UK last year a total of 18 funds with gross assets of €3.8bn launched.
This figure is overshadowed by the three other regions. North America led the way with 66 funds reflecting €18.2bn of assets launched, followed by Europe, where 49 vehicles with equity, debt and properties totalling €16.7bn were launched. Asia came in third with gross assets of €8.5bn raised by 18 vehicles.
Style was split globally with the majority of UK and European vehicles – some 121 and 401 respectively – targeting core investments, while Asia at the other end of the scale had more than 171 vehicles with €68m of assets pursuing opportunistic strategies.
In the US, value-added funds edged out core with 330 vehicles accounting for €147bn of assets going up the risk curve, according to the Global Real Estate Funds Review.
Looking at vehicles by sector, diversified funds comprised the lion’s share of launches in all geographies, followed by retail in the UK and Europe. In the US, residential came second by number of funds, followed by debt vehicles.
The review showed termination build up to a peak in 2016 in the UK with 17 vehicles coming to the end of their life. This follows 10 this year and 13 in 2015.
Pan-regional players
A total of 22 funds with a pan-regional strategy launched in 2013 with a combined GAV of €30.8bn – nearly 50% more than the €16.1bn GAV in 2012.
Multi-jurisdiction funds showed a greater appetite for risk than single-region vehicles; opportunistic is the most common strategy among the 302 vehicles surveyed.
Diversified funds are most common with pan-region funds.
bridget.oconnell@estatesgazette.com
sophia.furber@estatesgazette.com
