On 21 May, the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) released its 2019 Fund Manager Survey. This year’s survey is based on the responses of 173 managers and represents total real estate AUM of €2.8 trillion. I would highly recommend anyone in our sector to read it. Key insights include:
The market is healthy and growing – Overall the real estate market is healthy with a year-on-year AUM increase of 12% as at the end of 2018; the fifth consecutive year of growth. This year we also saw a slight increase in the growth rate compared to the previous year (11.6%), however when we look at the absolute AUM in 2018 of €2.7 trillion, we see there was a correction in the market.
Concentration in the market – The research reveals an average AUM of just over €16 billion, again marking an increase versus the previous year. That said, continuation of the concentration trend is also apparent. The top ten managers represent 40.2% of total real estate AUM. Blackstone even managed to break through the €200 billion mark – a first in INREV Fund Manager Survey history.
This continuing concentration is unsurprising. When I speak to managers, the large ones are not struggling to raise capital for their next fund, while the smaller or spin-out managers are taking longer than planned. At IQ-EQ we’re seeing an increasing number of joint ventures (JVs) as a route to market allowing new managers to demonstrate their expertise in a more controlled environment.
Unlisted is still the route to market – Unlisted real estate vehicles still account for the majority of the market (82.9%). As outlined above, JVs are increasingly important to investors. As such, they’re now making up nearly 30% of the AUM.
Unsurprisingly, the listed space has not grown; at IQ-EQ we have seen a number of well-backed REITs pulled that had been planning to launch in Q1/2 of 2019.
Pension funds the golden ticket – Pension funds continue to be the largest allocators, and this is consistent globally.
Difference in Global LP – As is to be expected, the second largest allocators differ geographically. In Europe, insurance companies are an important source of capital, while in Asia sovereign wealth funds are the second largest allocators.
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