Publications

- October 1, 2019: Vol. 6, Number 9

Green wave: AUM among top 10 real estate managers swells to $1.2t

by Larry Gray

It was only a short 10 years ago that institutional real estate investors and managers were sorting through the wreckage caused by the global financial crisis. Fund managers were dealing with redemptions, properties were being repriced — in some cases, portfolio values declined 40 to 50 percent — and investors were tightening their purse strings as they focused on managing existing assets rather than making new deals. In short, things were pretty bleak.

Fast forward to today, and the global real estate industry has reached new heights, riding a wave of unprecedented economic expansion in some regions. To provide some perspective to the industry’s quick and impressive turnaround, consider that the assets under management of the top 100 real estate investment managers totaled approximately $1.2 trillion in 2008. Based on 2018 data, the top 100 firms now account for AUM of nearly $3.48 trillion, according to Global Investment Managers 2019, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. What’s more astounding, the top 10 investment managers today have AUM equal to the AUM total of the top 100 firms in 2008.

A few more numbers to ponder: the largest investment manager in 2008 — ING Real Estate Investment Management — reported AUM of $92.5 billion; in this year’s survey, the industry’s largest firm, Blackstone, reported AUM of more than $230 billion. The top 10 firms in the industry today represent AUM of $1.2 trillion, more than double 2008’s corresponding figure of $503.4 billion.

“The industry has experienced explosive growth since the global financial crisis,” says Geoffrey Dohrmann, president and CEO of IREI. “The real estate asset class continues to gain in popularity across the globe, delivering steady income and solid returns in the ongoing low interest rate environment. Investment managers have benefited from a strong flow of new capital and impressive asset appreciation.”

Andrew Baum, chairman of Property Funds Research, adds: “While we are witnessing significant growth in the real estate investment industry, we should also be keenly aware of an undercurrent of consolidation — in a lower-return world, M&A looks like the precursor to some serious scale-based innovation, with an opportunity for managers to use more tech to drive efficiency and manage margins.”

Blackstone remains at the top of the rankings for the third consecutive year with AUM of $230.6 billion, an increase of 19.0 percent from the $193.8 billion reported for 2017. Brookfield Asset Management ranked second with AUM of $193.3 billion (up 17.2 percent), and Nuveen Global Real Estate ranked third with AUM of $124.6 billion (up 14.2 percent). Rounding out the top five were Hines ($119.4 billion) and CBRE Global Investors ($107.2 billion).

Looking at total market AUM on a geographic basis, North America–based assets account for 47.72 percent, while Europe represents 36.48 percent. Asia claims 6.41 percent of the assets and Australasia accounts for 4.39 percent, while Latin America registers 0.85 percent.

 

Larry Gray is editorial director for Institutional Real Estate, Inc.

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