Unlisted real estate equity fund-raising is set to have another bumper year in 2014 after setting an “intriguing” record in 2013.
Some 650 funds are in the market seeking to raise $187bn (£114.5bn) to invest directly into global real estate, according to Indirex, the online community for the private real estate funds market.
Of this, the funds have already booked $95bn through earlier closes – mostly the big US players that have already secured more than 40% of their $80bn target.
At the same time last year Indirex reported 397 funds looking for more than $150bn.
A geographic analysis of this year’s target reveals that most equity – some $54bn – is being sought to invest in Asia Pacific real estate, when this time last year that region offered the fewest investment options.
The UK is also set to reap a greater proportion of investment this year, with UK-focused vehicles hunting for $22bn of cash. Last year, actual investment into the UK was $9.4bn.
The 2014 expectations follow a strong year in which managers, including Blackstone and Lone Star, set records around the world, contributing to a total global real estate equity fundraising of $156bn. This compares with £144bn in the 2008 boom.
Indirex founder Colin Barber said: “It is intriguing that as recently as April and May commentators were saying that 2013 was a weak fund-raising year. We can now see that more equity was raised than was reported raised in the boom – and we are nowhere near the same stage in the cycle.
“The question is, are we at the beginning of a strong period as conditions are improving?” He added that it was still a difficult environment “unless you are the right manager with the right product”.
The most prolific risk category in 2013 was “opportunity” with these vehicles claiming half the cash. Only a third was aimed at core or core-plus vehicles.
The amount of cash raised for debt funds has returned to growth at 20% this year, up from 11% last year and 17% in 2011, while 14% is for infrastructure and alternatives.
Which funds raised the most cash, and where is it going?
Some 405 firms announced cash-raising events globally, involving 595 individual funds; 393 of these declared cash raised.
The top three globally were Lone Star ($11.9bn), Brookfield ($11.7bn) and Blackstone ($9.2bn). Top in Europe was Blackstone Real Estate Partners – Europe IV with a record-breaking $4bn.
Kildare Partners’ inaugural cash-raising brought in nearly $2.2bn, predominantly from North American investors targeting Europe.
The UK was the “most targeted single country” ?after the US’s £45.2bn, with £9.4bn. It was followed by China and Japan, with up to $6.2bn each. Around $1.56bn was raised for investment into Germany.
Cash allocated to global funds, which are increasingly focused outside the US, was $39bn. Cash targeting Europe, often through a multi-country pan-European strategy, was $31bn. Cash targeting the UK was £9.4bn.
bridget.o’connell@estatesgazette.com
