For the past two years, with markets roiled by high interest rates, APG Asset Management has curtailed new allocations to commercial real estate vehicles. But its head of global real estate says there are now encouraging signs that the slide in property values may be approaching an end.

APG’s “very selective” allocations to managers have “been a significant change from where we were previously,” says Rutger van der Lubbe, whose team oversees €55 billion of real estate exposure for ABP and a few other Dutch pension funds. “We have been selectively readying investment vehicles to capture the opportunities that we expect will materialise, rather than deploying that capital immediately in the market itself.”

The correction in real estate markets has deterred investment and persuaded fund managers to wait for better times before selling assets to return capital to their investors. This has created a bottleneck in institutional capital to be reallocated into