- December 2008: Vol. 20 No. 12

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Real Estate Investments Decline

by Ryan Garner

Capital investment to real estate saw its first decline in several years, according to Institutional Real Estate, Inc.’s database of publicly announced commitments. Institutional investors committed $15.5 billion to real estate in 2008, a 12 percent decline from the $17.6 billion tracked during 2007. IREI tracked commitments worth $13.9 billion in 2006 and $9.4 billion in 2005.

The pullback is indicative of investors’ uncertainty in the wider markets during the year. Many investors preferred to “wait and see” what would happen to the economy before committing capital.

In real estate, commitments to private equity funds declined from 91 percent to 68 percent this year, according to the database. Debt, a strategy where many investors sensed opportunity, was an exception. Debt funds made up 18 percent of this year’s commitments, as compared to just 5 percent of last year’s commitments. Investors as a whole have increased their focus on mezzanine loans, whole l

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