Total value of global real estate AUM surges by 20%

The total value of real estate assets under management reached €2.4 trillion ($2.7 trillion) in 2016, up 20.1 percent on the €2 trillion ($2.2 trillion) peak achieved the previous year, based on an increase in the sample size of the global Fund Manager Survey 2017.

The joint report by INREV, ANREV and NCREIF also revealed significant growth in the average AUM of the top 50 global real estate fund managers with a 14.9 percent uplift from €35.6 billion ($39.79 billion) in 2015 to €40.8 billion ($45.6 billion).

The top 10 global fund managers accounted for 38.8 percent of the overall total and the average total AUM of the top three fund managers reached €133 billion ($148.65 billion) versus €127.8 billion ($142.84 billion) the previous year. However, the average AUM of all respondents was up from €13.1 billion to €13.7 billion ($14.64 billion to $14.31 billion), indicating an increase in funds under management for all managers regardless of size.

Blackstone Group topped the overall rankings, followed by Brookfield Asset Management, and PGIM Inc. in third position, which jumped six places from ninth the year before. Principal Real Estate Investors and Hines joined the top 10 global fund managers by total AUM, displacing LaSalle Investment Management and Invesco Real Estate. Also, AXA Investment Managers - Real estate and CBRE Global Investors – featured in the global top 10. AXA dominated the list of European managers.

One in five survey respondents said they had been involved in M&A activity during the past decade, reflecting the continuing trend for consolidation — particularly among larger managers.

Non-listed real estate vehicles — including funds, separate accounts, joint ventures and club deals — accounted for €1.9 trillion ($2.1 trillion), 80.4 percent, of total AUM. However, there were notable differences in regional investment strategies with non-listed real estate funds and private REITs accounting for 53.4 percent, 49.5 percent and 50.6 percent of total AUM in Europe, North America and Asia Pacific, respectively.

There are also regional differences in the size of non-listed real estate funds. While funds make up almost half of total AUM in both Europe and North America, the average fund size is €400 million and €1.5 billion ($447 million and $1.7 billion), respectively, showing a sizeable value difference in favor of North American vehicles.

Henri Vuong, INREV’s director of research and market information, commented: “This survey suggests that big is beautiful. The size of the real estate pie is clearly continuing to grow with non-listed vehicles remaining a dominant part of that expansion. The survey also echoes investors’ stated appetite for greater allocations to real estate overall. It seems there’s plenty of dry powder waiting to be deployed.”