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Research - APRIL 12, 2018

Capital raised for real estate investment increases by 25%

by Andrea Zander

Approximately $160.2 billion in new capital was raised globally by real estate investment managers in 2017, a 25 percent increase on 2016, according to the 2018 Capital Raising Survey, published by ANREV, INREV and NCREIF.

The results show clear investor confidence in the asset class, with equity being raised for 895 vehicles, up from 733 the previous year and with gains across all regions.

Vehicles with an Asia Pacific strategy raised $26.6 billion, an increase from $22.9 billion in 2016. Of this total, Asia Pacific non-listed real estate funds enjoyed a record year, accounting for $18.6 billion.

European strategies once again led the way, with $70.7 billion in capital raised, followed by vehicles with a North American strategy, which raised $46.2 billion.

Big gains were made by vehicles with a global strategy, which made up more than 10.4 percent of total capital — the equivalent of $16.6 billion. This was most strikingly the case in North America, where over half of all capital is intended to be deployed outside the home region.

Non-listed funds demonstrated an enduring appeal, with managers raising $88.2 billion for these vehicles, reflecting the trend identified in the Investment Intentions Survey 2017. A smaller, but still significant, $33.2 billion was raised for separate accounts (direct). Joint ventures and clubs were the only vehicles to not see uplifts in the amount of capital raised.

Interestingly, the survey revealed a shift in the balance of capital sources with more corporations and nontraditional investors, including high-net-worth individuals and families, increasing their share of capital raised. In turn, there was a proportional decrease in the percentage of capital coming from pension funds and insurance companies. Together, these typically dominant sources of capital accounted for 62.1 percent of the total.

“As highlighted in our Investment Intentions surveys, real estate remains a very attractive asset class for investors. The 25 percent uplift in capital raised in 2017 is another proof of it,” commented Amelie Delaunay, ANREV director of research and professional standards.

 

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