Urban logistics assets are generally utilised to provide the “last-mile” fulfillment for ecommerce operators. They have risen in importance due to ever-shortening delivery time expectations, as well as various new entrants to the market, such as grocery retailers. In addition to ecommerce, smaller-format units are generally favoured by traditional industrial operators as well. This has already translated into much higher rental growth for urban logistics when compared with their big-box peers. Data produced by Property Markets Analysis, shows that urban logistics rents were almost 40 percent higher in 2020 than they were in 2007 — while other logistics rents have not progressed much over the past decade.
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The global real estate industry continues to reach new heights post–global financial crisis. During the past decade, the asset class has gained in popularity across the globe, delivering steady income and solid returns in the ongoing low interest-rate environment. This year's survey, which captured 2020 figures from 212 investment managers, pegged total AUM at €3.81 trillion, an impressive increase from the 2010 total of €1.25 trillion. In addition, global AUM is up 12.9 percent from €3.67 trillion reported in last year's survey.
The 2020 rankings include 10 firms with AUM greater than $100 billion, compared with eight firms last year. Only five short years ago, that exclusive club numbered only two — Brookfield Asset Management and Blackstone.
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The global real estate industry continues to reach new heights post–global financial crisis. During the past decade, the asset class has gained in popularity across the globe, delivering steady income and solid returns in the ongoing low-interest rate environment. This year's survey, which captured 2020 figures from 212 investment managers, pegged total AUM at $4.65 trillion, an impressive increase from the 2010 total of $1.47 trillion. In addition, global AUM is up 12.9 percent from $4.12 trillion reported in last year's survey. The 2020 rankings include 10 firms with AUM greater than $100 billion, compared with eight firms last year. Only five short years ago, that exclusive club numbered only two — Brookfield Asset Management and Blackstone.
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ESG has moved from being a nice-to-have, to being an important part of infrastructure investing and can be used to drive action and outcomes. Today, the options for institutional investors to gain exposure to ESG have never been greater, with public markets seeing net new money into sustainable investment funds increase. In the following interview, Bronte Somes, Head of Infrastructure Equity Europe and Declan O’Brien, Head of Infrastructure Research & Strategy discuss ESG’s impact on infrastructure investing.
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The DIGITAL (Demographics, Innovation, Globalisation, Infrastructure, Technology, Active over the Long-term) trends that have so profoundly impacted the U.S. and listed real estate markets are starting to exert their influence on Europe.
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Real asset investors have been increasingly focused on inflation. In this paper, BlackRock discusses their views on inflation, whether it is transitory and where it will go. More importantly, BlackRock discusses the reasons why real assets may perform well in periods of higher inflation, and tools and strategies real assets investors should deploy in a higher inflationary environment.
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Regan Smith, managing director of real estate sustainability, explores why climate resilience management is vital in the face of climate change and the initiatives that can be undertaken in real estate portfolios and management practices.
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In a world searching for yield opportunities, we believe that more investors are coming to appreciate the balanced mix of favorable characteristics that U.S. real estate can add to a diversified investment portfolio. In addition to sustainable income, the world’s largest commercial real estate market may also offer investors an attractive combination of resiliency and value.
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Since the onset of COVID-19, we have provided timely updates on the pandemic; however, given the strong progress of the U.S. vaccination program, many investors are now turning their attention to the future and focusing on a resumption of business as usual. While the markets will likely remain dynamic in their evolution around the pandemic, the following includes several of the issues we have contemplated recently that relate to the path ahead.
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While the stuttering pandemic situation will weigh on near-term growth, the outlook for real estate in APAC is more sanguine. Demand for commercial real estate is expected to reverse into positive territory across most markets by the end of 2021. Investment activity in the logistics segment will be partly driven by the availability of quality stock. Investors could benefit from increased exposure to emerging segments.
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The office sector faces unique challenges during the coming decade. In this special report, Principal examines the return to a new normal for the office property type and what it means for real estate investors going forward.
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In 2019, we studied the income segments for renter households to ascertain the demographic driver for the multifamily industry. Since then, the country has endured an unexpected recession caused by a global pandemic, which has disrupted the economy but ultimately reinforced underlying trends. Despite recent market turbulence, this update to the original analysis continues to demonstrate that MiMis, or millennials and middle income households, will sustain demand for U.S. apartments in the coming decade. We define middle income households as those earning between 80% and 120% of area median income which is typically those earning between $45,000 and $75,000 per annum. These households comprise between 15% and 25% of each age cohort. Middle income households often have to rent out of necessity which creates consistent demand for apartments targeting middle income renters.
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As the commercial real estate (CRE) sector enters a second year of the global pandemic, it’s no surprise investor surveys report a continued interest in CRE debt vehicles. Not a single investor wanted to reduce their exposure to debt according to the 2020 INREV/ANREV/PREA survey covering CRE debt vehicles. It also reported that more investors were spreading their exposure by using a combination of debt funds across North America, Europe and Asia Pacific.
In a marketplace where managing risk has become increasingly important, that makes perfect sense. With uncertainty over the economic outlook remaining high, the appeal of private commercial real estate debt should continue to increase as investors pivot to investments that offer reliable cash flows and downside risk protection.
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Economic recovery is well underway in Europe, although the Delta variant dampens some of the promise from the first half of the year. Investor sentiment is more resilient than the underlying occupier markets, but is heavily targeted towards the “beds, sheds and meds” sectors. We continue to expect stronger returns away from the most crowded part of the market, or through development targeting markets and sectors with the strongest occupational dynamics.
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US economic recovery is pushing through the lingering headwinds of virus variants and sluggish job growth. A year of pent-up demand is powering progress in necessity-driven asset classes.
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Strong economic recovery, but Delta variant poses a threat. Office and retail sectors continue to have hardships, but more dynamic sub-segments have upside surprise factors. Post-pandemic pent-up demand is supporting the multifamily sector. Logistics continues to outpace expectations and is expected to have staying power.
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Manulife's U.S. commercial real estate outlook reveals the latest across the markets for investment, office, industrial, and multiresidential properties.
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Manulife's Canadian commercial real estate outlook reveals the latest developments across office, industrial, retail, and multifamily property markets.
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Employment rose during the second quarter of 2021 in 45 of the 48 real estate markets Principal tracks. Our “DIGITAL” sum of markets – those with key long-term growth drivers centered around DIGITAL (Demographics, Innovation, Globalization, Infrastructure, And Technology) – exceeded the national average during the past quarter. We still anticipate that many markets will fully rebound by 2023, with “DIGITAL” markets recovering quicker.
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According to IREI’s FundTracker database, Q2 2021 was a very good quarter for infrastructure fundraising, with more than $35 billion raised by 16 funds reaching a final close.
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Our last paper explored the structural trends driving demand for prime logistics space. Given that demand will remain strong in the foreseeable future, our focus now turns to the implications for new supply. The transformation of logistics real estate development has followed a compelling trajectory. Clear insight into the structural forces that shape supply trends allows customers to better navigate scarcity and prepare for demand-side shifts.
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The COVID-19 pandemic has uniquely affected workers as it forced millions into remote roles for the first time. Yet, despite the rise of telecommuting and advancements in digital communication over the past two decades, migration trends across the nation have actually been in decline after peaking in the 1980’s. We wonder: Has the COVID-19 pandemic reversed this secular trend or will it be a temporary black swan event?
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces—urbanization, digitalization and demographics—that have changed the way we live, work and shop.This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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Our research indicates that real estate exposure has historically provided an effective hedge against inflation. In contrast, other traditional long-only investments such as stocks, nominal bonds, and even listed REITs tend to be negatively impacted during inflationary environments. Further, direct real estate exposure provides a strong total return profile relative to other alternative investments.
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Quantifies the impact on the pandemic in shifting movement within markets, as suburban areas benefitted from increased urban outflows in 2020. We expect this activity to revert closer to pre-pandemic levels as the economy reopens, and continue to monitor these trends closely. This piece also suggests that net migration across markets in 2020 was largely consistent with pre-pandemic trends, and headlines suggesting otherwise were often misleading.
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Ongoing disruption is driving a shortage of raw building materials, resulting in increased input prices and extended lead times. Materials shortages are already resulting in development cost increases and project delays in the industrial sector. With the backdrop of surging demand for industrial space, the white paper evaluates concerns that construction material shortages could tap the brakes on construction activity. Competition for modern, well-located facilities combined with increased construction costs, suggests rents will continue to accelerate.
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Over the last few years, the private equity industry has radically reassessed the importance and value of ESG to their businesses. ESG has shifted from being considered an area of just compliance, to an overarching framework that informs the strategic thinking of many private equity firms - creating value and giving firms a competitive edge. In this edition of Green News & Views, we explore how our Multi-Managers Private Equity business has integrated ESG throughout the entire investment lifecycle from sourcing, investment due diligence, to the ongoing monitoring and reporting on investments.
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In this report, we take a look at the current state of the U.S. housing market, specifically digging into the details of the growing imbalances in for-sale and for-lease inventory and what we expect to see in the coming years. While this is not a new story, the current disparities between supply and demand in both for-sale and for-lease markets have reached record highs. Some factors contributing to the acceleration of demand for single-family homes (like the pandemic) may go away, but even if supply increases and demand stabilizes tomorrow it may take 1-2 years to normalize inventory to 2018-19 levels. We expect the effects of these supply-demand imbalances will persist and only gradually reverse over time. It may be several quarters before we see more normal rates of growth in home prices and rents.
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At its meeting last week, the Federal Open Market Committee (FOMC) changed the Federal Reserve's forecast "dot plot" of short-term interest rate expectations, increasing the median forecast to two rate hikes in 2023 versus none in the last March meeting. Read about some implications for commercial real estate.
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After a tough start to the year there are some causes for optimism for the European economy and real estate markets. The vaccine rollout is finally gathering steam, giving hope that some degree of normalization can be achieved in the second half of the year. Capital markets remain healthy, although in-demand sectors and assets are seeing heavy price inflation. Sourcing value will be a key challenge for the rest of 2021.
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As summer approaches, we expect the US will make progress in the slow process of reopening. With that renewal, markets are starting to move again as well. By autumn, real estate investors should gain insight from increasing comparable leases and sales.
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What to do in a negative-yield world? UBS's Declan O’Brien, Head of Infrastructure Research and Strategy and Perry Offutt, Head of Infrastructure Americas, give a deep-dive into the evolving and emerging infrastructure sector and the role it can play in investors’ portfolios.
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Global real estate markets are still coming to terms with the economic fallout from the pandemic, but showed a strong performance in the first quarter, driven by the industrial sector. In Europe, the vaccine rollout is finally gathering steam, giving hope that some degree of normalization can be achieved in the second half of the year. In the US, markets are all starting to move, and investors should gain insight from increasing comparable leases and sales. While in APAC, growth prospects have been largely based on the resumption of global demand.
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REITs have spearheaded the growth of real estate investors into non-traditional property types. The U.S. institutional private real estate market is also rapidly expanding into these property types and we anticipate a material allocation to non-traditional properties in the future.
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Out of a crisis comes opportunity. Given our assessment of the outlook for global and regional estate markets, we identify these opportunities as being among the most attractive on a risk-adjusted basis over the next 12 months.
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With vaccinations making steady progress, the near-term outlook for the U.S. economy is as bright as it’s been in three decades. However, risks remain—and the recovery will be uneven across and within markets and sectors. The Barings Real Estate team weighs in.
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Property investors and their lenders are shifting down the risk curve and becoming highly selective about sector exposures and asset quality. The Barings Real Estate team weighs in on how these trends will drive opportunities through 2021 and beyond.
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces -- urbanization, digitalization and demographics -- that have changed the way we live, work and shop. This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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After enduring a torrid COVID-19 driven winter surge, the UK is finally beginning to see light at the end of the tunnel. Rapid and widespread vaccination has helped dramatically lower caseloads and fatality levels, enabling the economy to gradually re-open.
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Sustainable infrastructure investments play a driving role in decarbonization, improving livelihoods and economies. For infrastructure investors, factoring in financially relevant sustainability information can lead to better investment decisions. Multi-Manager Infrastructure have outlined their top 5 factors to consider when integrating ESG in the investment process. Through integrating these 5 factors, the business can promote sustainable long-term growth which can benefit companies, investors and creates greater impact in the industry at large.
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Increased transaction activity late last year reflects pent-up investor demand for real estate assets, with a clear preference for industrial and apartments as 2021 begins. We expect retail and office to continue to face headwinds even as the economy improves.
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The European economy ends 2020 fairly battered and bruised as the second wave of the COVID-19 pandemic hit hard, both in terms of infections and the wider economy. Offices are showing some weakness on the occupier side, while retail continues to struggle. Logistics has been going from strength to strength, however, as have alternative sectors such as residential. Overall, capital markets remain buoyant as there is significant dry powder targeting real assets.
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In this global report, PGIM looks at the underlying demand for data centers and examines how, based on current trends, the sector is set to grow significantly in the coming years.
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PGIM's Investment Research team identifies the nine major occupier and investment trends expected to influence market conditions and investment performance in 2021 and beyond.
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Learn more about the trends and themes shaping the real estate market today in Nuveen Real Estate’s latest commentary: Perspectives in today’s real estate market.
Developed by Nuveen’s market leading research team, you’ll gain a deep dive into global, regional and sector trends and learn why we believe strategic allocation of real estate is the right choice for long-term investment benefit.
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Climate change poses a complex set of investment risks and opportunities for real estate portfolios. Nuveen Real Estate’s net zero carbon pathway highlights our robust framework for anticipating, evaluating and addressing issues before value corrections erode financial performance.
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Are real estate investors already invested in infrastructure? While optimism mounts and recovery begins, the ever-present challenges for long-term investors remain—the need for income, portfolio diversification and capital growth. Read more in Principal's newest issue of The Decisive Eye.
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces—urbanization, digitalization and demographics—that have changed the way we live, work and shop.
This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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Capital markets are increasingly penciling in a higher interest rate scenario as reflected in a sharp steepening in the Treasury yield curve over the past 30 days. The yield on the 10-year bond has increased by 40 bps over the past 30 days. Capital markets anticipate a continued increase in benchmark 10-year yield, which has resulted in elevated volatility in public risk assets as well as growing questions on appropriate risk premia from illiquid investments. What does this mean for real estate? How will the different property types respond?
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The rollout of vaccines gives rise to cautious optimism that the economy will improve in the second half of the year as lockdowns can be lifted. Real estate investment activity has shown some pick-up but remains below pre-pandemic levels. Logistics property remains the focus for the main commercial sectors, with interest in niche and specialist real estate types being driven higher.
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The economic disruption caused by the pandemic brings new and unique opportunities for US real estate investors. Some weakness should persist into 2021 as effects from the pandemic and 2020 recession ripple through society and the economy. As the year progresses, positive news on vaccine distribution, competitive lending markets, and fiscal stimulus should support a meaningful rebound in economic growth and a turnaround in aggregate real estate performance.
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This paper examines real estate market fundamentals and key themes to watch in 2021.
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We are excited to share our new bi-annual sector report featuring insights from investment professionals across all four real estate quadrants and providing current conditions and outlooks for all of the core real estate sectors, as well as emerging sectors such as data centers and life sciences.
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Real estate investment activity has shown some pick-up but remains below pre-pandemic levels. The retail and office sectors continue to face headwinds even as the economy improves, while logistics remains the focus for the main commercial sectors. Investors should remain on the lookout for tactical opportunities arising from the pandemic.
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The long shadow of COVID-19 continues to impact Real Estate everywhere, not least in Europe where vaccination programmes have had a rocky start. However, as we reveal in our new bi-annual European Real Estate Sector Report, not all sectors have been impacted in the same way as we highlight in the latest edition.
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While the ongoing disruption from the pandemic will put downward pressure on market fundamentals until the virus is no longer a threat, opportunities will likely emerge across the risk-return spectrum in advance of a recovery in demand and property income.
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Introduced in 2015, the Prologis Logistics Rent Index examines trends in net effective market rental growth in key logistics real estate markets in North America, Europe, Asia and Latin America. Our proprietary methodology focuses on taking rents, net of concessions, for logistics facilities. To create the index, Prologis Research combines the company’s local insights on market pricing dynamics with data from our global portfolio. Rental rates at the regional and global levels are weighted averages based on estimates of market revenue.
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Investors have sought to add real estate to their multi-asset portfolios due to the lower volatility, higher component of total return from income, diversification and tangible nature associated with real estate relative to other assets generally. Real estate is often seen as defensive in this regard. Exogenous shocks or Black Swan events, such as Covid-19, are by definition, ‘unknowable’ with respect to occurrence and consequence and therefore susceptible to the limitations of statistical models, a priori. This paper examines real estate investing, not just from whether it is defensive, but whether it has antifragility characteristics. Antifragility refers to an investment that is not only robust to exogenous shocks but benefits from such shocks. We show from first principles and from empirical data that real estate has antifragility and warrants higher allocations to multi-asset portfolios for
this reason.
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Real estate investor interest for European multifamily assets has been growing continuously in the last decade. In UBS's view, resilient income-driven performance, supported by strong occupier market fundamentals and long-term socio-demographic trends, will continue to fuel the rise of this asset class in the coming years.
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In this paper, UBS examines how office space will continue to add value to employees and employers after the current health situation has subsided. The post-COVID-19 future will be characterized by technological advances and organizations determining the right balance of remote work to advance their organizational priorities rather than one that sees a move toward an office-free world. Core and value-add office strategies which follow the three investment principles of purpose, accessibility and ESG, can provide good opportunities.
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Sustainable farmland practices play a vital role in reducing greenhouse gas emissions as well as conserving energy and water. It can also help to meet global demand for food, while encouraging sustainable practices benefiting the environment over the long-term. Investors, tenants, local operators and farm managers, should foster sustainability best practices, while respecting the land rights and the communities in which they operate for a greener and more sustainable future for us all.
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With e-commerce setting records during the 2020 holiday season and package deliveries forecast to grow by 80% over the next decade, a new study by the MIT Real Estate Innovation Lab reveals the tangible environmental benefits of online shopping.
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Prologis’ leading indicator of logistics real estate demand showed significant volatility in the second quarter.
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According to IREI's FundTracker database, the COVID-19 pandemic may have finally affected fundraising. Preliminary fourth quarter 2020 numbers show only 14 funds closed and only $13.48 billion in capital raised, the lowest fundraising total since first quarter 2013.
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According to IREI's FundTracker database, preliminary numbers show, infrastructure fundraising in 2020 is inline with previous years.
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With e-commerce setting records during the 2020 holiday season and package deliveries forecast to grow by 80% over the next decade, a new study by the MIT Real Estate Innovation Lab reveals the tangible environmental benefits of online shopping.
Driven by the stay-at-home economy, online retailing surged and remained at peak levels throughout 2020. Early estimates suggest U.S. online sales grew by upwards of 50% (y/y) in 2020’s expanded holiday shopping season, with similar trajectories in other major e-commerce markets including China, Europe, Japan and elsewhere. Using average emissions results from the MIT study, the share shift to e-commerce resulted in approximately 2.4% fewer emissions per package.
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The growth of e-commerce over the past decade has demonstrated just how critical logistics real estate is to our customers’ revenue generation. Increasingly, logistics users must have the right location and the right building equipped with the right features in order to tap into the power of today’s evolving supply chain as a source of competitive advantage. Automation has the ability to unlock this potential in a big way. The logistics real estate sector has been facing shortages on two key fronts: a shortage of skilled labor and of well-located logistics space. Compounding this is the severe capacity crunch in last mile delivery -- shippers and parcel delivery companies cannot handle more packages and are turning away business. Increasingly, customers recognize that automation can help address these issues, and those that do not act now are getting left behind. In examining the tie between real estate and automation in customer operations, we identified four key takeaways.
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According to IREI's FundTracker database, preliminary fourth-quarter numbers show only four fund closings thus far, raising approximately $4.6 billion. There are 18 more funds in the FundTracker database targeting a close by year-end 2020. However, even if all 18 funds close by Dec. 31, fourth quarter 2020 could produce the lowest quarterly fundraising total since fourth quarter 2011.
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As we approach the end of 2020, the infrastructure sector looks to have weathered the COVID-19 crisis reasonably well. While certain sub-sectors were severely impacted, 1Q20 valuations for the sector were more resilient than other alternative asset classes and infrastructure companies saw fewer downgrades and defaults than their equivalent corporates. With a vaccine in sight, policy makers will continue to focus on how to support the economy in the interim, while fiscal stimulus looks like an attractive proposition. Government spending is likely to be directed towards supporting jobs while also investing in healthcare, decarbonization and digital infrastructure, potentially providing a boon for infrastructure investors.
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When we looked ahead to 2020, back in early December 2019, we have to confess that we did not even mention COVID-19, let alone foresee the massive impact that this new virus would have on the world. However, some of the predictions we made then have proved prescient. In our latest Top 10 real estate questions, we explore how the year developed and provide our predictions on real estate for 2021.
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Automation has the power to revolutionize logistics operations. As capabilities expand alongside declining costs, faster returns on investment (ROIs) are fueling adoption. Three trends are aligning to drive higher levels of automation within our facilities. First, COVID has led to greater absenteeism, further stressing labor availability. Second, technology continues to improve, expanding capabilities and reducing costs. Third, labor-intensive operations, specifically e-commerce, are growing quickly. These users benefit greatly from this technology and are leading adopters. This dramatic transformation cannot be overstated: What was expected to take years to gain traction is occurring in mere months. As a result, some logistics customers are making significant investments in automation. In this report, the first in a series, we examine the current state of warehouse automation, how it is changing, and impacts on desired building features.
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A widespread rise in virus cases threatens the economic recovery, though positive news on vaccine trials points to brighter prospects for 2021. Investment activity remains subdued and real estate capital value movements have varied by sector, showing small falls at the all property level in the third quarter. So far there is limited distress in the market, but we do expect some investment opportunities to be generated.
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Under a Biden presidency, the next wave of infrastructure investments will have greater emphasis on ESG issues. The extent of this will depend on the outcome of the Senate race, although historically, there is more bipartisan support for clean energy than headlines suggest. Private infrastructure funds, equipped with USD 200 billion of dry powder, will likely play an important role, especially given government budget constraints.
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According to IREI's FundTracker database, infrastructure fundraising in third quarter 2020 was on par with second quarter, with seven funds raising $16 billion.
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According to IREI's FundTracker database, while preliminary data for the third quarter indicates a drop-off from the previous quarter ($43.4 bilion was raised by funds closing in the second quarter), it is actually an increase on a year-over-year basis. The $20.7 billion raised by funds that closed in third quarter 2020 exceeds the $19.9 billion raised by funds that closed in third quarter 2019.
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September 2020 - The Central Valley is California’s fastest-growing and most-affordable region. The area’s economy is fueled by three large, recession-resistant economic sectors: government (including the nation’s second-largest government center, Sacramento), healthcare and agriculture. Based on projected future economic and population growth — as well as higher cap rates — the Central Valley is a classic example of a secondary market that is in the early stages of transitioning away from local and regional ownership to a larger base of institutional owners.
This report by Institutional Real Estate, Inc. titled California’s Central Valley: Land of affordability, growth and opportunity, looks at the opportunity in California’s Central Valley, where investors can tap into the region’s growth story and still find markets and properties that offer significantly higher risk-adjusted returns.
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August 2020 - The life sciences property sector has flourished during the past few years and that trend is expected to continue in the near term and well into the future. The sector’s positive property fundamentals have been fueled by record-setting life sciences industry capital infusions, creating growth and additional demand for office, R&D, lab space and other related facilities. Investors are increasingly recognizing the benefits — strong property-level fundamentals, portfolio diversification, value-add opportunities — of investing in life sciences properties in well-established and emerging clusters across the United States.
This report by Institutional Real Estate, Inc. titled Life Sciences: Expanding life sciences industry create opportunity for real estate investors, looks at the opportunity in the expanding life sciences sector, the increase in employment rates, investor opportunity in life sciences and more.
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The aggregate AUM of the top 100 real estate largest investment managers increased by 9.1 percent, totaling more than $3.83 trillion, according to Global Investment Managers 2020, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled $1.2 trillion.
A total of 207 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of nearly $4.12 trillion. The top 10 largest investment managers accounted for $1.35 trillion of AUM, which represents 32.6 percent of the total. The 2020 report, based on 2019 AUM figures, showed eight investment managers with assets of more than $100 billion, up from only three in 2017. The eye opener is the fact that there are two investment managers with assets of more than $200 billion.
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The aggregate AUM of the top 100 largest real estate investment managers increased by 9.1 percent, totaling more than €3.41 trillion, according to Global Investment Managers 2020, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled €85 billion.
A total of 207 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of nearly €3.67 trillion. The top 10 largest investment managers accounted for €1.2 trillion of AUM, which represents 32.6 percent of the total. The 2020 report, based on 2019 AUM figures, showed four investment managers with assets of more than €100 billion, up from only three in 2017. The eye opener is the fact that there are two investment managers with assets of more than €150 billion.
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Crisis precipitates change. COVID-19 has brought more than five years of evolution in the retail landscape into less than five months of time. Increased demand for high quality and infill logistics real estate is on the rise, stemming from the accelerated adoption of e-commerce and just-in-case inventory. In contrast, challenges have become more pronounced for retail real estate. Collectively, these changes have prompted retail owners to explore the opportunity to convert retail space for distribution uses. Prologis Research sized this trend to measure the potential implications for our industry.
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According to IREI's FundTracker database, more than 200 infrastructure investment funds are currently seeking capital. Nearly two-thirds of those funds have global or Europe-focused strategies.
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Economies have seen the sharpest contractions on record while massive central bank and government intervention has supported asset prices. In real estate the crisis has turbo-charged trends we were already seeing prior to the crisis, boosting logistics and hurting retail. We are now in the social-distancing phase, but investors need to think long-term and position themselves for once the pandemic has passed.
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According to IREI's FundTracker, more than 900 funds are currently seeking capital. Approximately 85 percent are focused on North America and Europe.
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According to preliminary data from IREI's FundTracker database, infrastructure fundraising in second quarter 2020 fell considerably compared to first quarter, with eight funds raising more than $13 billion in the second quarter. In First quarter, 14 funds raised more than $39 billion and in fourth quarter 2019, eight funds closed on more than $41 billion.
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According to IREI's FundTracker database, preliminary numbers indicate real estate investment funds closing in second quarter 2020 raised the highest second quarter total since second quarter 2008 and the highest overall quarterly total since first quarter 2019's record-setting $63.7 billion.
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This paper explores the impact of COVID-19 on both the industrial sector and European distribution networks. UBS leverages a variety of economic and high frequency indicators to see how the demand for logistics real estate may evolve in the coming years.
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The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets. Near-term indicators of performance have turned sharply downward, and the situation is fast-moving. At the same time, some lessons for what is to come can be drawn from past downturns, although causes and effects are, as always, different this time. Values are set to remain under pressure in the near term owing to stress in occupier and investment markets — and the range of possible outcomes is wide — but there are some reasons for optimism.
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The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets. Near-term indicators of performance have turned sharply downward, and the situation is fast-moving. At the same time, the Asia Pacific region is set to lead a global recovery, and while real estate occupier and investment markets are under near-term pressure, a significant opportunity set is expected to emerge.
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No property type is immune to uncertainty and financial impact. A great deal of uncertainty remains around the reopening and recovery of the US economy, a process that is likely to be extended over time rather than a quick rebound to pre-downturn economic levels.
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Deal flow has returned to most European markets, but heavily focused towards the core end of the risk spectrum. Pricing in this segment of the market appears to be holding up, but discounts expected as assets move up the risk curve. Historically low leverage levels should help prevent forced sales. But rising costs of new lending may stifle a recovery in activity and place outward pressure on yields.
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According to the FundTracker database, global/multi-regional infrastructure funds that closed in the past 12 months accounted for two-thirds of the capital raised.
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According to IREI's FundTracker database, investors have favored the relatively safe markets of North America and Europe during the past 12 months, with global funds accounting for just 14 percent of the capital raised by funds closing in that period.
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As we start the third decade of the 21st century, it is an opportune time to take stock of real estate markets around the world. Despite the aftershocks of the global financial crisis, most investors have taken advantage of real estate opportunities outside their home markets. At AEW we have been working with international investors for nearly 40 years. In this report, we share our perspective on global investment markets, considering both global trends and occupier market trends.
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Limited current and future supply levels will limit the decline in prime office rents in the short term. But the economic challenges are likely to lead to headcount reductions, with corporates vacating unutilized space. This trend could be accelerated, if as we expect, corporates adopt higher levels of flexible working in a post COVID-19 world.
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UBS believes it is too early to write the epitaph for the entire office sector as there are a number of counterbalancing forces at work. However, the realities are that landlords, companies and tenants alike will all be forced to improvise, adapt and overcome a number of challenges in the post COVID-19 world.
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Disruption to office occupiers is not as significant as other sectors. But a protracted downturn will hurt revenue streams and lead to a spike in defaults. Serviced office providers are, however, facing very immediate impacts to their cash flows. Will they be able to survive long enough to benefit from any structural shifts longer term?
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It's an election year. Economic growth lost some steam. Interest rates remain low. Our US Real Estate Outlook 2020 outlines where we see solid fundamentals and uncovers pockets of uncertainty. Find out what we expect for the four property sectors in the new year, including strategic themes to guide investment decisions in private real estate.
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According to IREI's FundTracker database, preliminary data shows infrastructure fundraising in first quarter 2020 nearly matched fourth quarter 2019, with 14 funds raising more than $39 billion. In fourth quarter 2019, eight funds raised more than $41 billion. Nearly twice the number of funds closed in first quarter 2020 but raised a similar amount of capital as was raised in fourth quarter 2019.
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Courtesy of Elion Partners
With consumers forced to stay home, e-commerce has seen an acceleration in sales, placing a strain on inventory levels and supply chains. This catalytic shift in consumer behavior is driving logistics real estate to serve as the infrastructure to answer that demand.
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According to IREI's FundTracker database, preliminary data shows the number of real estate funds closing are down to 22 in first quarter 2020, compared with 35 funds in the first three months of 2017. Many funds were closing when the COVID-19 pandemic was just reaching the U.S., but the pandemic doesn't seem to have skewed the numbers too much as of now.
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According to IREI's FundTracker database, infrastructure funds are continuing to increase in size, fueled by the emergence of the ultra-mega-fund. At the same time, it took a bit longer for the average 2019 infrastructure fund to close than the average 2018 fund.
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According to IREI's FundTracker database, mega-funds have grown exponentially during the past three years, while non-mega funds have remained relatively stable. Although the average mega-fund reaches the final closing a bit faster than the average non-mega fund, all funds are closing in about 17 months, on average.
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According to IREI’s FundTracker database, infrastructure fundraising in fourth quarter 2019 far outpaced previous quarters during the year, with eight funds raising more than $41 billion.
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According to IREI's FundTracker database, after a record-setting start to the year, fundraising fizzled in the second half of 2019. Preliminary data shows fundraising totaled $119.2 billion for the last year.
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According to IREI’s FundTracker database, preliminary numbers show infrastructure fundraising in 2019 has outpaced previous years.
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According to IREI’s FundTracker database, preliminary numbers show only nine fund closings have occurred during the fourth quarter, accounting for $6.3 billion.
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Invesco Real Estate presents, "Considerations for investing in global real estate."
Many investors are familiar with the appeal of holding real estate. With
a generally low correlation to other asset classes, it can serve as an
instant diversifier in a mixed-asset portfolio. Historically, real estate has
delivered strong relative performance across multiple cycles compared
to other asset classes, and its characteristic stable income, underpinned
by long-term leases, makes it a compelling alternative to traditional
fixed-income instruments. Participation in real estate from the investor
community is one of the highest among the various alternatives asset
classes, and is expected to grow in importance in portfolio allocations
moving forward.
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According to IREI’s FundTracker database, infrastructure investment managers closed eight funds in third quarter 2019, raising more than $8.1 billion.
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The AEW European Research & Strategy team are pleased to present our September 2019 quarterly research report, “European Real Estate Debt”, where the European Research & Strategy team takes a closer look at all-in interest rates and loan margins available to investors, as based on our new granular loan-by-loan database. The results of our new commercial real estate interest rate model and its key drivers are being discussed. The lender perspective is also considered by looking at historical loan defaults and losses to ensure that current margins are sufficient to cover these.
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The AEW European Research & Strategy team are pleased to present our June 2019 quarterly research report, “Factor Investing 2019”, where the European Research & Strategy team have applied Factor Investing to nearly 40 European office markets. Factor Investing identifies multiple factors that drive excess returns compared to any market portfolio. This so-called smart beta strategy uses factors such as volatility, liquidity, quality, value, yield and growth. Finally, we compare factor investing to the traditional core and value add investment styles.
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The AEW European Research & Strategy team are pleased to present our March 2019 quarterly research report, ‘AEW’s Peripheral Property Perspective’, looking at how cross-asset investors can evaluate real estate private equity and debt compared to their listed bond and equity allocations.
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The AEW European Research & Strategy team are pleased to present the 2019 European Annual Outlook. In this forward looking report, we present our outlook for the European commercial real estate markets for 2019 and beyond. As many European markets move into the later stages of the cycle, we launch our new risk-adjusted return approach to help meet the increasing challenges investors will face.
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According to IREI’s FundTracker database, decline in real estate fund closings is taking a more dramatic downturn with approximately 16 funds closing in third quarter 2019, compared to 23 funds in second quarter 2019 and 28 in first quarter 2019.
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According to IREI’s FundTracker database, close to 200 infrastructure funds are currently open for investment. Europe and Global/Multi-regional strategies combine for approximately 60 percent of those funds, but other regions are also seeing a fair amount of activity.
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According to IREI’s FundTracker database, there are approximately 800 real estate investment funds currently seeking capital. Slightly more than half are closed-end funds, with the rest being open-end or semi-open funds.
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According to IREI’s FundTracker database, infrastructure investment managers closed nine funds in Q2 2019, raising nearly $16.3 billion. Our preliminary data finds that fewer funds are raising less capital compared to Q2 2018, when 15 funds held final closings, raising more than $19 billion.
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According to IREI’s FundTracker database, roughly $17.4b was raised in Q2 2019, based on preliminary data. Thanks to a number of large mega-funds, record fundraising activity was registered in Q1 2019, which will likely push first-half 2019 volume to a record high once final Q2 data is available.
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The aggregate AUM of the top 100 largest real estate investment managers totals 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. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled $1.2 trillion. A total of 206 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of more than $3.7 trillion. The top 10 firms in this year’s rankings totaled more than $1.2 trillion of AUM — a 6.1 percent increase from last year — a total that represents 33.5 percent of the entire survey universe. Additional evidence of a concentration of assets in this top-heavy industry: the top 20 firms account for AUM of $1.865 trillion (49.6 percent of the total universe), which is nearly as much as the other 186 investment managers in the survey ($1.892 trillion).
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The aggregate AUM of the top 100 largest real estate investment managers total nearly €3.04 trillion, according to Global Investment Managers 2019, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled €0.85 trillion. A total of 206 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of more than €3.23 trillion. The top 10 firms in this year’s rankings totaled more than €1.07 trillion of AUM — a 6.1 percent increase from last year — a total that represents 33.5 percent of the entire survey universe. Additional evidence of a concentration of assets in this top-heavy industry: the top 20 firms account for AUM of €1.628 trillion (49.6 percent of the total universe), which is nearly as much as the other 186 investment managers in the survey (€1.654 trillion).
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According to IREI’s FundTracker database, more than half the capital raised by infrastructure funds reaching a final close during the past three years, the past 12 months and YTD 2019 went to global or multi-regional strategies.
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According to IREI’s FundTracker, global/multi-regional funds are leading the fundraising pack, accounting for more than 70 percent of the capital raised by funds reaching a final close year-to-date 2019.
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Two super-mega-funds sponsored by Blackstone and Brookfield raised $17.3 billion and $15.0 billion, respectively, pushing first quarter 2019 fundraising volume to a record total.
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January 2019 — After 10 years of relatively unabated economic strength, the region looks to be stuttering. However the softer economic environment does not come as a surprise; mid last year we flagged a potentially slower growth trajectory for the Asia Pacific region in the latter half of 2018. Among the reasons we cited trade tensions exacerbating weakness in China’s economic slowdown, tighter financing conditions from rising global interest rates, and the related pass-through into weaker domestic demand. However, it is the depth and breadth of the potential slowdown that should currently worry global institutional investors. To be sure, regional growth has slowed in the past few months, but the outlook remains cloudy at best if recent equity market performance is any guide.
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The average size of an infrastructure private equity fund increased slightly in 2018 — to $2.0 billion — but the average closing time decreased to 17.1 months compared with 20.7 months in 2017.
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November 2018 — We believe MiMis, or millennials and middle income households, will continue to drive demand for U.S. apartments in the coming decade. We define middle income households as those earning between 80% and 120% of area median income which is typically those earning between $45,000 and $75,000 per annum. These households comprise between 20% and 35% of each age cohort. Middle income households often have to rent out of necessity which creates consistent demand for apartments targeting middle income renters. Millennials are the largest generation on record and like the Baby Boomers before them, they will reshape the economy and many industries as they heavily consume goods and services, including housing. Millennials compose 35% of the workforce and their contribution to the U.S. economy continues to grow. In this analysis, we define the millennial generation as those born between 1981 and 1998. Furthermore, we divide the millennials into older millennials (OMs) and younger millennials (YMs) cohorts.
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With the proliferation of mega-funds, the average fund size climbed to $801 million in 2018, up from $590 million two years ago.
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Only three infrastructure funds held final closings in fourth quarter through Dec. 4, but their capital totals helped push infrastructure fundraising to new heights in 2018.
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With nearly $100 billion raised in the first three quarters of the year, the 2018 12-month total has a chance to break the all-time record of $134.9 billion set in 2008.
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The ever expanding size of funds in infrastructure markets is a trend that isn’t likely to end anytime soon. In fact, the definition of mega-funds — those funds with final closes of $2 billion or more — might need to be updated to reflect funds that are increasingly targeting $10s of billions in capital commitments.
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Year-to-date, 35 infrastructure funds have closed with more than $69.4 billion raised, which already puts 2018 in the record books as the year with the highest 12-month fundraising volume.
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According to the IREI FundTracker database, funds reaching a final close in third quarter 2018 raised a total of $28.6 billion compared to $18.3 billion raised during third quarter 2017.
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According to IREI’s FundTracker database, 288 infrastructure investment funds are currently marketing. Of those, 37 are open-end, six are semi-closed-end (having a long but finite fundraising period), and the remaining are closed-end.
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According to the IREI FundTracker database, there are 336 open-end funds, 460 closed-end funds and 36 semi-closed end (has a 7- to 10-year fundraising window) funds currently soliciting capital.
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According to IREI’s FundTracker database, infrastructure mega-funds have accounted for 76 percent of the capital raised, as of Aug. 1, 2018. In addition, more mega-funds have already closed YTD than in any of the past five years.
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According to the FundTracker database, 2018 fundraising is ahead of 2017, thanks to the increasing size of large mega-funds that have closed year to date.
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The aggregate AUM of the top 100 largest investment managers increased by 15.8 percent in 2017, totaling more than $3.2 trillion, according to Global Investment Managers 2018, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled $1.2 trillion. A total of 197 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of nearly $3.5 trillion. The top 10 largest investment managers accounted for $1.154 trillion of AUM, which represents 33.2 percent of the total. This group of managers saw their AUM increase 11.2 percent from year-end 2016. The 2017 report, based on 2016 AUM figures, showed only three investment managers with assets of more than $100 billion. In this year’s rankings, six firms eclipsed the $100 billion mark.
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The aggregate AUM of the top 100 largest investment managers totaled more than €2.71 trillion, according to Global Investment Managers 2018, the annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. For some perspective, at year-end 2008, the aggregate AUM of the top 100 investment managers totaled €1.44 trillion. A total of 197 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of nearly €2.90 trillion. The top 10 largest investment managers accounted for €961.5 billion of AUM, which represents 33.2 percent of the total. This group of managers saw their AUM increase 11.2 percent from year-end 2016. The 2017 report, based on 2016 AUM figures, showed only three investment managers with assets of more than €80 billion. In this year’s rankings, six firms eclipsed the €80 billion mark.
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According to IREI’s FundTracker database, infrastructure fundraising is on pace to have a very good year. If the second half proves as positive as the first, it could even be a record year.
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According to the FundTracker database, real estate investment fundraising in the first half of 2018 is tracking well ahead of the first half of 2017 and 2016. If fundraising continues at the same pace it has in previous years, total commitments in 2018 could top those of the record-setting 2015.
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In 2016, 16 percent of the infrastructure funds reaching a final closing were debt funds. Last year, that percentage fell to 7 percent. When looking at capital raised, 2016 saw 8 percent of the total capital coming from debt funds. In 2017, that total fell to 5 percent. The trend looks to be continuing into 2018.
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March 2018 — CenterSquare’s REIT Cap Rate Perspective presents the market pricing of $1.5 trillion of real estate in the U.S. REIT market, seeking to quantify the valuation gap between public and private markets. While at times the disparity may be temporary or driven by short term volatility, the forward discounting inherent in public markets can also offer investors insights as to the possible future direction of real estate values. In this report, CenterSquare shares their proprietary REIT implied cap rate results at the sector and geographical level on a quarterly basis.
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According to the IREI FundTracker database, real estate investment funds with a debt component accounted for 28 percent of the funds reaching final close in 2017, up from 2016’s 22 percent share. They also accounted for 44 percent of the capital raised in 2017, versus 32 percent in 2016.
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According to the IREI FundTracker database, investors are showing a strong preference for regionally focused funds, with global funds continuing to raise less capital than other strategies.
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According to IREI’s FundTracker database, global funds account for 41 percent of the capital raised YTD 2018 in funds reaching a final closing. In 2017, global funds accounted for only 18 percent of the capital raised.
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According to the IREI FundTracker database, private equity infrastructure funds closing in first quarter 2018 raised significantly less capital than those closing first quarter 2017. If things continue in this direction, it will add 2018 to the ebb and flow pattern seen since at least 2013, where odd number years are good for infrastructure fundraising, and even numbered years not so good.
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According to IREI’s FundTracker database, more capital was raised by real estate investment funds closing in Q1/2018 than in any first quarter since 2015.
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According to data from IREI’s FundTracker database, infrastructure funds are continuing to grow in size, with the largest dominating the market. Funds raising more than $2 billion accounted for 74 percent of the capital raised, while funds raising $3 billion or more brought in 56 percent of the capital. Those raising less than $500 million accounted for only 4 percent of the total capital raised.
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During the past three years, more than 60 percent of capital was raised by mega-funds. Funds raising less than $500 million accounted for about 60 percent of the number of funds, but less than 20 percent of the capital raised.
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According to IREI’s FundTracker database, infrastructure funds took a bit more time to close in 2017 than they did in 2016. Averages can be deceiving, however, as both the two fastest and two slowest closing funds were European.
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According to IREI’s FundTrack database, real estate funds holding a final close in 2017 were on offer for about 18.0 months. This compares to 18.7 months in both 2014 and 2015, and 19 months in 2016. Trimmed averages confirm that marketing times are inching down, with 2017’s trimmed mean coming in at 17.1 months compared to 17.7 months and 17.6 months in 2015 and 2016, respectively.
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According to IREI’s FundTracker database, preliminary 2017 numbers indicate that infrastructure fundraising has continued its ebb and flow fundraising pattern, with 2014 being a down year, 2015 being up, 2016 being down and 2017 being up again. During this time, the market is moving in an overall upward direction.
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According to IREI’s FundTracker database, only 19 funds have reported a final closing so far in Q4 2017, with an aggregate total of capital raised coming in at $13.6 billion. This is significantly fewer than the number of funds closed in Q4 2016, as well as significantly less capital raised.
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According to IREI’s FundTracker database, 2017 infrastructure fundraising is very similar to that of 2016. Total aggregate capital raised, total number of funds closed, average size of funds and other 2017 metrics are nearly the same as 2016.
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TrendWatch updates a few of the charts used during the year and finds investors continuing to move to the defensive end of the spectrum, investment funds continuing to grow in size, mega-funds continuing to dominate, and investment totals continuing to trend down.
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Based on capital raised by infrastructure funds holding a final closing in the past three years, just five managers have raised 35 percent of the capital, despite being only 8 percent of the managers sponsoring funds closing since Jan. 1, 2015. The top 10 managers brought in 51 percent of the capital.
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According to the Global Investment Managers 2017 survey, the top 20 real estate investment firms now control more than half of the world’s real estate assets under management. These firms increased their market share by 1 percent year-over-year, which is pretty significant when based on the $3 trillion in assets under management reported by the 199 firms responding to the survey.
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October 2017 — Real estate investors should consider the following trends and potential value they can bring to their investments in the year ahead: current REIT valuations are increasingly being impacted by investor activism, there is substantial capital flow from non-VC investors, robotic process automation can help CRE companies bring down costs drastically and may end up being cheaper than offshoring.
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We’re three-quarters of the way through 2017, and it appears that 2017 infrastructure fundraising has a very good chance of coming in ahead of 2016, and is enticingly close to surpassing 2015, as well. In addition, the average size of funds reaching final closing is continuing to grow.
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Early third quarter numbers are in, and they continue to point to 2017 being a down year for real estate investment funds when compared to 2015 and 2016. The amount of capital raised, number of funds reaching a final close and the average size of the funds were all down in Q3/17, as well as in the first three quarters combined, when compared to the same time periods in previous years.
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According to IREI’s FundTracker database, more than two-thirds of the infrastructure funds launched since the beginning of 2014 are still seeking investors. Europe is favored when looking at sheer numbers of funds, but global strategies jump to the top when looking at the amount of capital sought.
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More than 900 private equity real estate funds are currently in the marketing phase of their lifecycle, with about two-thirds of those being closed-end funds. One third of the funds in the market were launched in 2016 or 2017, but more than 160 closed-end funds were first offered prior to 2014.
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The aggregate AUM of the top 100 largest investment managers increased 7.3 percent in 2016, totaling more than $2.8 trillion, according to Global Investment Managers 2017, an annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. A total of 199 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of slightly more than $3 trillion. The top 10 largest investment managers accounted for $1.038 trillion of AUM, which represents 34.5 percent of the total. This group of managers saw their AUM increase an average of 12.2 percent from 2015.
Blackstone topped the rankings with more than $166 billion of AUM, followed by Brookfield Asset Management and PGIM, with $148 billion and $125 billion of AUM, respectively.
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The aggregate AUM of the top 100 largest investment managers increased 7.3 percent in 2016, totaling more than €2.7 trillion, according to Global Investment Managers 2017, an annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. A total of 199 real estate investment managers across the globe responded to the survey, representing an aggregate AUM of slightly more than €2.8 trillion. The top 10 largest investment managers accounted for €0.98 trillion of AUM, which represents 34.5 percent of the total. This group of managers saw their AUM increase an average of 12.2 percent from 2015.
Blackstone topped the rankings with more than €158 billion of AUM, followed by Brookfield Asset Management
and PGIM, with €140 billion and €119 billion of AUM, respectively.
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According to IREI’s FundTracker database, nearly four-fifths of capital raised by infrastructure funds holding a final close in 2017 has been committed to a mega-fund — those funds raising $2 billion or more. Average mega-fund size is continuing to increase, as is the range between the smallest and largest mega-funds.
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Although mega-funds have raised 62 percent of the capital raised by funds holding a final close since the beginning of 2017, their average size has decreased significantly.
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According to the IREI FundTracker database, less than $3 billion was raised by infrastructure funds reaching a final close in the second quarter of 2017. Thanks to the $15.8 billion GIP III fund closing in the first quarter, first half 2017 is still well ahead of first half 2016, but fundraising trends don’t bode well for the rest of the year.
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According to IREI’s FundTracker database, infrastructure debt funds are having trouble gaining traction. They accounted for less than 8% of the capital raised by infrastructure funds reaching a final close in 2016. So far in 2017, they have failed to show up at all, with no debt fund closing year to date.
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According to IREI’s FundTracker database, debt-only funds plus funds with a debt component made up 40 percent of the capital closed in 2014. That market share has fallen each year until it now stands at just 27 percent of capital raised YTD 2017.
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According to the IREI FundTracker database, global infrastructure funds have grown both in size and market share during the past three years and are currently dominating the infrastructure fundraising market. In contrast, U.S. funds have seen their share of the market fall to just 12 percent in 2016, and less than 1 percent YTD 2017.
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According to IREI’s FundTracker database, market share for global/multi-regional funds has fallen since 2015, and is now surpassed by both North American– and Europe-focused funds.
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February 2017 — The world in 2017 has much to offer, but it will require real estate professionals to be more informed than they have ever been. As well as comprehensive macroeconomics and real estate coverage, CBRE offers five key research themes:
Capital markets: the search for alternatives
Office: new work styles, new locations
Retail: changing technology
Industrial: transformation of the supply chain
Hotel: new experiences, new platforms
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January 2017 — Despite significant global economic and political uncertainty, the steady U.S. economy — aided by stimulative fiscal policy — could see stronger growth in 2017, supporting attractive returns for real estate investors.
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December 2016 — PGIM identifies nine major occupier and investment trends that are expected to influence market conditions and investment performance in 2017 and beyond. Uncertainty is higher than it was 12 months ago — forthcoming elections in major European countries carry a renewed significance in light of recent results — but the economic backdrop remains broadly supportive. Sentiment is holding up, and the global growth outlook is steady going into 2017.
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Fundraising totals for infrastructure funds reaching final closing in first quarter 2017 reached more than $30 billion, according to IREI’s FundTracker database. One fund accounted for more than half this total.
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According to IREI’s FundTracker database, fundraising totals are significantly down in the first quarter of 2017 when compared to the same periods of 2015 and 2016. These first quarter numbers are preliminary and will change as additional data is captured, but it is unlikely first quarter 2017 will approach the total of first quarter 2016, which itself was lower than the total raised in first quarter 2015.
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According to IREI’s FundTracker database, infrastructure mega-funds — those $2 billion or more in size — have accounted for 70 percent of the capital raised by closed funds since 2014. These funds have increased their market share each year since 2012, and are on track to continue this trend into 2017.
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March, 2017 — According to IREI’s FundTracker database, mega-funds are still raising more than their fair share of capital, with their three-year rolling averages continuing to trend upward. However, their percentage of the total market fell in 2016 versus 2015.
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February, 2017 — According to the IREI FundTracker database, infrastructure funds reaching final closing in 2016 were in the market almost 20 percent longer than those closing in 2015. Their 18.2-month average was the longest since 2012.
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February, 2017 — According to IREI’s FundTracker database, real estate funds holding a final closing in 2016 were only in the market, start to finish, for about 18 months, on average. Global funds, debt funds and mega-funds all reached a final closing significantly sooner than the mean.
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January, 2017 — According to IREI’s FundTracker database, infrastructure funds reaching final close in 2016 raised an aggregate of $56.4 billion, coming in slightly ahead of 2015’s total. Mega-funds accounted for 33 percent of all funds closed, while raising 75 percent of the year’s total capital.
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January, 2017 — According to IREI’s FundTracker database, 2016 was a solid, but not spectacular, fundraising year, with annual capital raised coming in at $90 billion, well short of 2015’s $110 billion total.
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December, 2016 — 2016 is turning out to look like a repeat of 2015 in the infrastructure fundraising arena. The number of funds closed and capital raised are the same, or nearly the same, YTD 2016 as that of 2015. Other metrics also bring a sense of déjà vu.
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December, 2016 — According to IREI’s FundTracker database, 2016 is trailing 2015’s fundraising totals by about $25 billion. In addition, investors are looking toward more defensive strategies, such as debt funds, and stepping back a bit from higher-return strategies.
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November, 2016 — According to the IREI FundTracker database, the top infrastructure managers continue to control an outsized share of the market, with sponsors of the five largest funds accounting for nearly one-quarter of the capital raised since 2014. Sponsors of the 10 largest funds closing in that time account for about 38 percent of the capital raised.
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November, 2016 — According to IREI’s FundTracker, the real estate investment industry grew about 13 percent by year-end 2015. As in past years, much of the growth was consolidated in a few top firms, with the top two firms alone being responsible for more than 10 percent of the world’s AUM.
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October 2016 — Infrastructure assets have provided the critical underlying structure to societies for centuries. However, as a distinct investment category infrastructure only really emerged from the beginning of 2009 onwards - just after the Global Financial Crisis.
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October, 2016 — According to IREI’s FundTracker, infrastructure funds closing in third quarter 2016 raised $21.7 billion, bringing the yearly total to $43.8 billion.
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October, 2016 — Continuing the trend found in the first two quarters of 2016, fewer funds reached final closing, and less capital was raised, in third quarter 2016 than in third quarter 2015. Two funds were responsible for 40 percent of the capital raised in that quarter.
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September, 2016 — According to IREI’s TrendWatch, 52 percent of the infrastructure funds reaching final close since Jan. 1, 2014, focused on energy strategies. Energy funds also account for 46 percent of infrastructure funds launched in that time period.
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September, 2016 — According to IREI’s FundTracker database, diversified funds accounted for 42 percent of the real estate funds closed, and 52 percent of the capital raised, since Jan. 1, 2015. The second most-popular sector focus was debt, followed by residential funds.
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August, 2016 — Infrastructure mega-funds have accounted for 78 percent of capital raised by infrastructure funds closing year-to-date 2016. One fund accounted for nearly 38 percent of all capital raised YTD.
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August, 2016 — Mega-funds, which accounted for 66 percent of the capital closed in 2015 only account for 55 percent so far this year. They are also taking slightly longer to close than in previous years.
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July, 2016 — Funds closing in second quarter 2016 raised only 34 percent of capital raised by funds closing in the same time period of 2015. Based on amount of capital raised YTD, 2016 is proving to be a very slow year for infrastructure.
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July, 2016 — The trend of fewer real estate investment funds raising larger amounts of capital is continuing quarter-over-quarter and year-over-year. When looking at funds holding final closes in second quarter 2016, three of the 24 funds closed accounted for 55 percent of the capital raised.
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June, 2016 — In the past 30 months, infrastructure funds holding a final closing have raised $124.3 billion. Just $9.4 billion of that total came from debt funds. So far in 2016, only one debt fund has closed, raising $647 million for Europe infrastructure.
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June, 2016 — According to IREI’s FundTracker database, the amount of capital raised by debt funds has slowed but, because the entire fundraising market has slowed, their market share has increased. North America and Europe continue to attract the lion’s share of interest.
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Q2/2016 — In the post Global Financial Crisis investment world, a distinct asset class called “Real Assets” has emerged, primarily motivated by the desire of investors to increase diversification and income while reducing volatility. In the current low yield, low growth investment environment, we recommend a more defined focus on “Income Producing Real Assets” (IPRA) in an effort to meet these objectives. Download the report to continue reading.
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May, 2016 — Based on YTD data, 2016 is looking like it will be a weak fundraising year for infrastructure. Amount of capital raised by funds closed, amount of capital targeted by nearly launched funds, and absolute number of funds launched and closed are all down year-over-year — as well as down year over multiple years.
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May, 2016 — Only 62 funds have launched this year compared to 101 during the same time period last year, and only 34 funds have closed versus 41 at this time in 2015. North America, in particular, has seen a fall off in interest.
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April, 2014 — According to preliminary first quarter 2016 numbers, the number of infrastructure funds reaching a final close in the first quarter has continued to decrease while the size of those funds has increased. In addition, the time from launch to final closing is increasing.
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April, 2016 — Based on early numbers for first quarter 2016, real estate fundraising is chugging along at a steady pace, with amounts raised in Q1/15 and Q1/16 being nearly identical. Higher-return strategies dominate as investors look to meet return objectives.
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March 2016 — Since the development of commercial aviation during the post-World War II era, passenger volumes at major commercial airports has grown at multiples of GDP over any medium-term period. This growth reflects many underlying factors including increasing wealth, real reductions in the cost of air travel, developments in aircraft technology and improvements in international airspace regulation. Download report to read more.
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March 2016 — Cloud-based software applications, smartphones and other mobile devices have unplugged and revolutionized the modern-day workforce. This is having a profound effect on office owners, occupiers and employers, and will challenge the existing paradigms that platform the entire commercial office real estate industry for years to come.
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March, 2016 — In 2013, the average infrastructure fund closed at $1.6 billion. By 2015, that average had increased to $2.2 billion. Despite the fact that non-mega funds grew to almost $1 billion on average, mega-funds still accounted for 72 percent of the capital raised by funds closing in 2015.
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March 2016 — The 2016 outlook for Europe remains one of gradual recovery. However, unlike previous years, Europe seems to be on a firmer footing relative to other parts of the globe. Although the continent has not been immune to recent global uncertainty, consumers and businesses have so far seemed undeterred, leading to an acceleration of GDP growth in 2015. Download the report to read more.
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March, 2016 — Mega-funds continue to take market share from smaller funds. In 2015, funds that closed with $1 billion or more in commitments accounted for 22 percent of all funds closed and 69 percent of the capital raised.
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2016 — Infrastructure Partnerships Australia (IPA) and Perpetual Corporate Trust have again undertaken this study of the Australian market for infrastructure projects and are delighted to jointly publish the Australian Infrastructure Investment Report.
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February 2016 — This paper discusses the relative merits of private versus public infrastructure investment.
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2016 — A number of managers enjoyed double-digit growth in AUM during the past year, according to Global Investment Managers 2016, an annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. The industry’s top two largest investment managers, Brookfield Asset Management, with €137.1 billion in AUM as of year-end 2015, and The Blackstone Group, with €135.8 billion in AUM, recorded growth of 19 percent and 22 percent, respectively, based on figures reported in the prior year’s survey. The two behemoths continue to outpace others in the industry, as there is a growing and sizable gap between them and the other largest investment management firms. Blackstone has become a fundraising machine. In early 2015, the firm closed its Blackstone Real Estate Partners VIII, raising a record €14.5 billion of equity. Brookfield also made a large haul recently, closing its Brookfield Strategic Real Estate Partners II in April 2016 with €8.2 billion of equity. This year’s report captures data on 194 real estate investment managers around the globe. As a group, they control nearly €2.7 trillion of real estate assets. Also indicative of the jump in AUM, the top 10 largest managers, as a group, experienced a 12 percent increase from the previous year; the top 100 managers recorded a 14 percent increase.
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2016 — A number of mangers enjoyed double-digit growth in AUM during the past year, according to Global Investment Managers 2016, an annual survey and report produced by Property Funds Research and Institutional Real Estate, Inc. The industry’s top two largest investment managers, Brookfield Asset Management, with $149.8 billion in AUM as of year-end 2015, and The Blackstone Group, with $147.6 billion in AUM, recorded growth of 19 percent and 22 percent, respectively, based on figures reported in the prior year’s survey. The two behemoths continue to outpace others in the industry, as there is a growing and sizable gap between them and the other largest investment management firms. Blackstone has become a fundraising machine. In early 2015, the firm closed its Blackstone Real Estate Partners VIII, raising a record $15.8 billion of equity. Brookfield also made a large haul recently, closing its Brookfield Strategic Real Estate Partners II in April 2016 with $9 billion of equity. This year’s report captures data on 194 real estate investment managers around the globe. As a group, they control nearly $2.8 trillion of real estate assets. Also indicative of the jump in AUM, the top 10 largest managers, as a group, experienced a 12 percent increase from the previous year; the top 100 managers recorded a 14 percent increase.
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February, 2016 — The amount of time the average fund takes from beginning to final close has crept up over the past year. Funds focused on North America and/or energy, however, closed more than 33 percent faster than the overall average.
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February, 2016 — According to IREI’s FundTracker database, the amount of time real estate funds are in the market has fallen steadily since 2013. Large funds, global funds and higher-return funds had the shortest closing times.
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January, 2016 — According to IREI’s FundTracker database, infrastructure investors can choose from more than 275 funds now in the market. Investment options range from debt to equity, from open-end to closed-end, from regionally focused to globally focused, and much more.
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January, 2016 — According to IREI’s FundTracker, investors have more choices than ever when it comes to placing their real estate allocations. The number of funds currently marketing has grown, as has the amount of capital being sought, the number of regions being targeted and the types of structure available to investors.
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January, 2016 — According to FundTracker, the 21 infrastructure funds closing in 2015 raised about $45 billion. In 2014, 32 funds raised $45.1 billion. Both years are a drop from 2013’s $52 billion raise, but both still represent a significant amount of capital looking for deals.
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January, 2016 — Thanks to Blackstone’s $15.8 billion fund close, 4Q/15 fundraising totals surpassed those of 4Q/14, and took 2015’s total capital raised past the $100 billion mark.
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December, 2016 — As 2015 winds down, investors and managers are looking back with a sigh of relief. 2014 had been a very good year for real estate, and there was some skepticism that the good times would continue. But they did.
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December, 2016 — According to FundTracker, the average size of all funds having final closings in the past three years is still growing — increasing from $507 million in 2013 to $883 million YTD 2015. Much of this increase, however, is due to the increasing size of mega-funds, which came in at $1.8 billion in 2013 and $2.7 billion YTD 2015.
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December, 2015 — TrendWatch tracked open-end funds launched since the beginning of 2011. The number launched each year grew through 2013, then began a slide that mirrored the growth years.
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December, 2015 — According to IREI's FundTracker database, 74 percent of all capital raised by funds closed year-to-date has been for higher-return strategies. In addition, the average fund size of higher-return funds is more than double that of lower-return or mid-return funds.
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Q4/2015 — 10 years is a magical number in the real estate business. Many investors analyze their returns over a hypothetical 10‐year hold, most standing loans on commercial real estate have a 10‐year term, and most closed‐end funds have a 10‐year life. Many commercial leases have 10‐year base terms. At the end of the 10‐year cycle, portfolios are culled and rationalized, loans are refinanced, funds are liquidated, and a whole new crop of tenant improvements and capital expenditures is needed to attract or retain tenants. Download the report to continue reading the most recent quarterly PCCP White Paper.
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November, 2015 — The need for modern infrastructure is wide and varied, but only three fund strategies are catching investors’ attention — energy, diversified and debt.
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November, 2015 — Despite investors often voicing a preference for sector-specific funds, the vast majority of real estate investment funds are diversified across all sectors. Another large percentage have mandates for two sectors. Few are truly sector-specific.
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November, 2015 — Despite the interest in infrastructure financing, only six infrastructure debt funds have closed since Jan. 1, 2013, according to IREI’s FundTracker. In total, these funds raised less than $10 billion.
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October, 2017 — Based on FundTracker data, real estate debt funds have become a significant part of the market. The amount of capital raised by funds with a debt component is significantly greater than their numbers would indicate.
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October, 2015 — TrendWatch finds that more infrastructure funds are launched in January than any other month. October is the most popular month for fund closings, while funds closed in April raised the most capital.
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October, 2016 — During the past four years, more funds were launched in January than any other month of the year. In fact, more than double the number of funds were launched in the first month of the year than in June, the second most popular month. June turns out to be the second most-popular month for closings, as well.
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October, 2015 — According to TrendWatch, only 25 infrastructure funds have been launched this year compared to 46 at this same time in 2014 and 61 at the end of third quarter 2013.
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September, 2015 — So far in 2015, 110 new real estate funds have launched, seeking an aggregate total of more than $50 billion. Of those funds, nearly 80 percent are focused on North America and Europe.
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September, 2015 — This paper delivers Aberdeen’s current research into the European residential sector at a country level. Specifically, we examine the rented, institutionally-owned residential sector. We believe that supply is constrained across Europe and on-going capacity constraints are commonplace. Development has simply not kept pace with demand. In our opinion, the most attractive market for residential real estate is Germany; however, other markets look promising as well. There are significant investment opportunities in the Netherlands, Sweden, Switzerland, Denmark, France and increasingly the U.K. Read our paper to learn more about how residential markets can differ enormously between countries and cities.
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September, 2015 — Despite a dearth of traditional infrastructure deals (i.e. anything except energy), the United States continues to attract more than 60 percent of the infrastructure capital raised by funds closed since 2013.
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September, 2015 — According to the Global Investment Managers 2015 survey, the top 20 real estate investment managers now control more than 50 percent of the total real estate AUM — and if trends continue, they’ll control even more next year as all firms in the top 10 have increased their AUM each year for the past two years.
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September, 2015 — According to IREI's FundTracker database, infrastructure funds launched since 2013 have been highly successful in meeting their goals, with the total raise reaching 71% of the total target. Only 32% of those funds have held final closings, but of the closed funds, 66% were oversubscribed.
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August, 2015 — The U.S. commercial real estate market has delivered impressive total returns over the past five years. So impressive, in fact, that some investors are beginning to wonder how much longer the momentum can run. This cycle, like all others, will eventually come to an end. Yet real estate has historically performed well in moderate-growth, low interest rate environments, conditions that we expect to persist for several more years. Download the report to read more.
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August, 2015 — Real estate performance across much of the Asia Pacific region has been steadily attractive on the back of a strong capital market and healthy recovering leasing market. Japan, China, Hong Kong and Singapore experienced strong office leasing demand in the first half of 2015, while Australia and Korea witnessed short-term challenges due to a weakened economy. Recovery is expected in 2016 for key most markets while it is likely to remain subdued in Singapore due to a surge of new supply. Download the report to read more.
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August, 2015 — According to data from FundTracker, 8 percent of the funds launched since 2013 have been sponsored by emerging managers. While the maximum fund size for funds launched by established managers is nearly 87 percent larger than the average emerging manager's fund size, most of the other data indicates that emerging managers are doing just as well as established managers when it comes to accessing capital.
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August, 2015 — According to the IREI FundTracker, the number of infrastructure funds launched in first half 2015 has fallen by 39 percent compared to the number launched in first half 2014. The number of funds closed has also fallen, though the amount of capital raised has increased.
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August, 2015 — Europe’s economic recovery remains on track. Although not without risks, with ongoing concerns in places such as Greece and Ukraine, on the whole the outlook for the European economy has improved over the past six months. Confidence is high and jobs are being created. With the ECB undertaking quantitative easing, bond yields are lower than had been previously expected, while the threat of Eurozone bond yields trending considerably higher over the coming years is small. Download the report to read more.
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August, 2015 — According to the IREI FundTracker, the first half of 2015 is a bit mixed when compared to the first half 2014. Fewer funds launched in 1H15 than in 1H14, but more funds have closed this year than last. The amount of capital raised in the first half of 2015 is about 37 percent more than that raised in the same period in 2014.
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August, 2015 — Energy funds have accounted for 57 percent of the total infrastructure funds launched and closed over the past three years, as measured by targeted and raised capital. And the attraction has increased each year, to the point that nearly all new funds launched in 2015 are energy focused. Where does this leave the other infrastructure sectors?
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July, 2015 — Mega-funds are capturing a larger market share than ever before. They now account for about 14 percent of the funds closed but about 65 percent of the capital raised YTD 2015.
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July, 2015 — Based on the infrastructure funds that have closed YTD 2015, the average fundraising period has fallen to less than a year. Americas-focused infrastructure funds closed in the shortest amount of time among the regions, while energy funds led the sectors.
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July, 2015 — Based on the funds that have closed YTD 2015, the average time for a fund to be in the market is now a little less than 17 months, compared to a little more than 17 months for all of 2014. Global funds, debt funds and mega funds are finding the most acceptance.
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July, 2015 — According to the IREI FundTracker database, the number of infrastructure funds launched during 2015 has slowed dramatically compared to previous years. The average fund size, however, remains well over $1 billion. To no one’s surprise, nearly all newly launched infrastructure funds are focused on the energy or renewables sector. For more details on what is going on in the market — and why investors are constantly in play, view the report.
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June, 2015 — With real estate reaching pre-recession levels in the major gateway cities and moving in the right direction in secondary regions, it is safe to say that real estate is back, and with it, funds are seeing a strong resurgence. According to the IREI FundTracker database, there are at least 25 more funds being marketed now than there were in January. For more details on what is in the market — and why investors will undoubtedly find their phones ringing nonstop this year.
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June, 2015 — One primary consideration of investors looking to make an allocation to listed real estate via real estate investment trusts (REITs) today is the impact that a rising-rate environment has on the relative performance of REITs vs. other broader asset classes. The purpose of this paper is to discuss how REITs have historically performed in different interest-rate environments, where we are today, and what we can expect going forward. We will also discuss the role of REITs in a portfolio as part of a comprehensive investment strategy.
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Q2/2015 — The eponymous movie starring Tom Hanks was released in 1989 at the onset of a massive population shift away from the urban core of American cities and into the suburbs. In the years that have passed since the Great Recession, however, America’s inner cities have led the way in the recovery, leading many to the conclusion that we have entered into a new paradigm of re‐urbanization. As it relates to commercial real estate, the thought is that a shift in population growth away from the American suburb will have a profoundly negative impact on suburban office as employers follow their workforce back into the CBD. Our instincts tell us that the “death of the American suburb” drum beat proliferated in the media is misguided and overplayed, a recipe for a good investment opportunity. In the end, success in real estate investing all boils down to supply and demand. Let’s take a step back and look at the macro forces at work.
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Spring, 2015 - The apparent predictability of the development cycle begs the question that if we can see projects rising before our eyes, and we can measure their progress along the way, and we can predict with a high degree of certainty when they will arrive, then why do so many people continue to claim that you cannot time the real estate market? The market cannot hide the supply pipeline that it is delivering from a distance, as the data and the physical evidence are available to most anyone who takes the time to observe them. The reality is that you can time the cyclicality of the real estate market, and, more importantly, to be a superior investor, you actually must time the market. More on that idea to follow, but first let’s set the stage...
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March, 2015 — The world is becoming increasingly urbanized, with a rising number of “megacities” that are experiencing rapid growth in both population and affluence in both the developed world and emerging markets. The world’s gateway cities are very appealing to property investors and appear to be a magnet for international capital. While there are common, shared characteristics across the world’s gateway cities there are also pronounced differences, particularly in the key variable of supply constraint (or lack of it).
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2015 — This report, put together by Prudential Investment Management (PIM), examines why right now is the primetime of urbanization, and explores the investment opportunities currently available in emerging markets due to the growth of cities, including urban infrastructure, real estate, technology, anti-pollution initiatives, and more.
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2015 — With the ambitious target of implementing the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) by 2015, the opportunities for corporate occupiers and real estate investors across an enlarged single market of some 600 million people look promising. Nicholas Holt examines the background, the challenges and the possible impacts. Nearly five years on from the signing of the AEC blueprint in November 2007, the region is now only three years away from the target of fully implementing measures to create a single market with free movement of goods, services, foreign direct investment and skilled labour.
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2015 — The Blackstone Group and Brookfield Asset Management continue their rivalry for the top spot among real estate investment managers. In the 2012 survey, Brookfield held the number 1 position. Last year, Blackstone moved ahead. And this year, Brookfield again moved into first place. The two behemoths both have approximately €100 billion under management with BAM increasing AUM by 16 percent, moving from €78.3 billion in 2013 to €103.8 billion in 2014; Blackstone saw a 12 percent increase in AUM, going from €78.5 billion in 2013 to €99.9 billion in 2014. The top 10 firms in the survey collectively manage €679 billion of assets, or 33 percent of the total. The top three firms in the rankings — BAM, Blackstone and CBRE Global Investors — account for nearly 14 percent of the AUM total. See the full report for the complete rankings of investment management firms based on AUM.
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2015 — The Blackstone Group and Brookfield Asset Management continue their rivalry for the top spot among real estate investment managers. In the 2012 survey, Brookfield held the number 1 position. Last year, Blackstone moved ahead. And this year, Brookfield again moved into first place. The two behemoths both have more than $120 billion under management with BAM increasing AUM by 16 percent, moving from $107.9 billion in 2013 to $125.6 billion in 2014; Blackstone saw a 12 percent increase in AUM, going from $108.2 billion in 2013 to $121.0 billion in 2014. The top 10 firms in the survey collectively manage $822.5 billion of assets, or 33 percent of the total. The top three firms in the rankings — BAM, Blackstone and CBRE Global Investors — account for nearly 14 percent of the AUM total. See the full report for the complete rankings of investment management firms based on AUM.
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2015 — The U.S. real estate market has posted solid returns the past few years. However, volatility is expected to return to the market, a signal for investors to examine their taste for risk and prepare for eventualities.
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2015 — Investments in student housing can offer diversification, strong current income and the potential for long-term growth.
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2015 — With a “build-to-core” strategy, investors can find opportunities along the capital stack throughout the real estate cycle.
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2015 — Real estate on the rise. What do the property markets have in store for 2015 and beyond? The commercial property types regrouped on a solid ground in 2014 after climbing back from the pit of lost values, deflated pricing and stagnant transaction markets set off by the Great Recession. From multifamily's long-standing growth run to the office market's plodding gains in tenant demand and retail's bifurcated efforts to pursue changing consumer spending habits, the property types had all found sufficient footing by the end of the year to generate meaty investor returns.
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Q3/2014 — We're continuing our exploration of supply and demand this quarter, but this time we are taking a look at condominiums, which was the last one sector of real estate that had substantial new development and unsold inventory during the last cycle. Today, almost six years later, much of the inventory ha been absorbed - largely at lower prices - or converted to rental units.
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June, 2014 — The U.S. economy temporarily contracted in the first quarter, impacted by sever winter weather. Real GDP declined at an annualized rate of 1.0% (second estimate) in Q1 2014, dragged down by declines in private investment and net exports. On the positive side, consumption expanded to a 3% annualized rate and real GDP was up 2% on year-over-year basis. Second quarter economic release portray a resilient and strengthening economy, albeit one that still face challenges (housing and long-term unemployment), that we expect to grow at 3% or above the rest of the year. Job growth is picking up, household wealth is rising, and policy uncertainity has essentially vanished from the news headlines.
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Q2/2014 — This quarter we're focusing on basic rules of economics: specifically, supply and demand. It is commonly understood that the Global Financial Crisis was not a real estate driven recession powered by commercial oversupply, like the early 1990s recession. Rather, it was caused by residential real estate over-pricing, largely driven by over-heated financial markets.
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Spring, 2014 — Australian and Canadian pension funds have been pioneers in infrastructure investing since the early 1990s. They also currently have the world’s highest asset allocation to infrastructure. The article compares and contrasts the experience of institutional investors in the two countries, looking at factors such as infrastructure policies, the pension system, investment strategies, and the governance of pension funds.
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April, 2014 — Real estate investment trusts (REITs) are relatively young asset class in Asia. The earliest markets to embrace the asset class were Japan and Singapore, both of which saw their first REIT initial public offering (IPOs) just a little over a decade ago. Since then, REIT markets have emerged in Hong Kong, Malaysia, Thailand, Taiwan, and South Korea, with additional markets such as India and the Philippines introducing REIT legislation or considering doing so.
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March, 2014 — This study discusses the role of institutional investors in financing infrastructure in emerging market and developing economies (EMDEs). It analyzes the present level of involvement as well as the future investment potential of new financing sources such as public and private pension funds, insurance companies, and sovereign wealth funds. Current investment volumes are still low, but interesting, practical examples can be found in a range of countries and projects. International and domestic investors apply a variety of investment approaches in developing countries, using different equity, debt and fund instruments.
This overview can yield some lessons for policy makers and investors. There are (more or less) favorable pre-conditions for successful private-investor involvement, and different models work in different situations, depending on the development stage and the institutional environment. Four types of "leadership models" are therefore described for international and/or domestic investors seeking to spearhead infrastructure investment in EMDEs.
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2014 — The Blackstone Group climbed to the top of the rankings, claiming the number one spot as the world's largest real estate investment manager, with more than €78.5 billion of assets under management. In addition, the aggregate total assets under management for the largest 100 real estate investment management firms reached €1.55 trillion in 2013, up 10 percent from the 2012 figure of €1.41 trillion, according to Global Investment Managers 2014, a report based on an annual survey by Property Funds Research and Institutional Real Estate, Inc. See the full report for the complete rankings of investment management firms based on AUM.
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2014 — The Blackstone Group climbed to the top of the rankings, claiming the number one spot as the world's largest real estate investment manager, with more than $108.2 billion of assets under management. In addition, the aggregate total assets under management for the largest 100 real estate investment management firms reached $2.14 trillion in 2013, up 10 percent from the 2012 figure of $1.94 trillion, according to Global Investment Managers 2014, a report based on an annual survey by Property Funds Research and Institutional Real Estate, Inc. See the full report for the complete rankings of investment management firms based on AUM.
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2014 — Within our new organisation, a unified investment strategy has been formulated using top-down analysis to identify the geography and cycle timing of prospective property investments. Targeting countries is the first layer of investment strategy, as country-level factors are a primary driver of property performance. These factors include both long-horizon elements of economic and demographic structure that contribute to the attractiveness of real estate investing, as well as shorter-term dynamics of real estate cycles and their drivers that detemine risk-adjusted pricing. This report offers a description of our top-down process and its conclusions for 2014. Bottom-up analysis dealing with individual sector, sub-markets and specific properties draws from the experience and expertise of our real estate professionals across disciplines. This complements top-down analysis and it an integral component of executing strategy.
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January, 2014 — Growing up in Canada, hockey was consistently a big part of my life (and still is). With the winter Olympics coming, 2014 is a big year in the hockey realm as twelve nations will compete for a gold medal in Sochi, Russia. In hockey, there are many ingredients: stick, skates, pads, ice, net, but none more important than the puck. The puck is a frozen disc of vulcanized rubber that every player is chasing, passing, shooting, defending and anticipating its next location. In fact, in the 1990s, Fox Television devised a system which had internal electronics allowing television viewers to track the position of the puck with a blue glow on the screen. Its purpose was to aid viewers to better follow and understand the action of the game.
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Q1/2014 — It's year end, time for the traditional look back at the accomplishments of the year just concluded, and for a look forward at the opportunities to come. The U.S. stock markets are at record highs, despite hints that the Federal Reserve is starting to back off on its quantitative easing strategy. The Wall Street Journal reports that in numerous markets, housing prices are past prior peaks (although the numbers are uneven).1 The U.S. Treasury is reflecting increased confidence in the economy, passing the 3.0% rate for the first time since 2011.
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November, 2013 — This white paper focuses on the potential of value-add strategies to generate attractive risk-adjusted returns in private real estate. Value-add strategies involve acquiring real estate at an attractive cost basis and then resolving the property’s deficiency, stabilizing the income stream, and increasing the overall value of the property for disposition.
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Q3/2013 — The U.S. economy appears to have recovered from the financial crisis. Equity markets reached record highs during the second quarter, with the Dow reaching its peak on May 28th at 15,409, an 18% increase from the beginning of the year. Fears of a double-dip recession have subsided behind 2.2% real GDP growth in 2012 and 2.5% projected GDP growth in 20131. With the continued growth of the economy, the Fed indicated that they may begin scaling back their monthly securities buying program. Despite the recent pull back in the markets, most indices are still very much in the positive for the year and the underlying macro-economic statistics are very positive year to date.
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2013 — Investor sentiment across many markets in Asia has grown increasingly uncertain toward the end of 2012, with concern over fading global economic prospects tempered by ongoing strength in asset pricing and persistently compressed yields. The lack of conviction has been highlighted by the divergent approaches of foreign and local investors to property pricing, with Asian buyers often willing to pay up for properties at rates foreigners find prohibitive.
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2Q/2013 — The 2008 financial crisis may forever be associated with one word: leverage. Homeowners (no money down mortgages), investment banks (30 to 1 leverage) and governments ($1 trillion deficits) took on too much debt, and the resulting correction has been painful.
Now, it seems that leverage is returning to commercial real estate, presenting new opportunities and a new set of risks. Leverage has grown more complex, and before making an investment, investors need to consider how leverage will impact investments in different parts of the cycle. Skillful management of leverage will be critical for investors to achieve required returns and survive any potential market correction.
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Global or local?
2013 — Property has long been considered a mainstream asset class for institutional investors. However, for most there has been a strong home-bias, with high exposure to domestic markets. Increasingly, we believe investors are looking toward global property markets as a way to improve potential risk-adjusted returns and divof their property portfolio. The step from domestic to global property investment, however, is not a trivial one and in some cases it may not be an appropriate solution. We believe the following three steps provide some insights into global property markets and also a framework for investors to understand better whether it might be a suitable approach for them.
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March, 2013 — Investment in infrastructure is among the world’s leading growth drivers and is a strategic priority for countries worldwide. Listed infrastructure companies are playing a dominant role in the accelerating growth of the infrastructure asset class globally. More than $50 trillion is likely needed to fund global infrastructure projects in the coming years, essentially making infrastructure among the world’s largest growth industries.
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March, 2013 — Defining the Objectives and Characteristics of a Real Assets Framework
In our view, the design of a real assets investment strategy is not just about inflation protection; it’s also about delivering attractive long-term returns with less volatility than found in most individual real asset classes. When inflation is rising, the strategy’s return potential should rise as well. When inflation is easing, its diversified return profile should be less volatile than those of individual real asset classes. And finally, the strategy should offer diversification(1) benefits for portfolios of stocks and bonds. As we applied these objectives to the design of a real assets framework, we identified five central themes.
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March, 2013 — Real estate securities combine the benefits of owning commercial real estate with the features of publicly traded stocks. This unique combination results in a set of investment characteristics that we believe make a compelling case for a long-term strategic allocation to the asset class.
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2013 — Over the last 12 to 18 months, there has been a noticeable increase in interest from US investors for opportunistic real estate investment in Europe. At Peakside Capital, we attribute this change to both "pull" and "push" factors. The "pull" is the realization in the US that the worst of the Eurozone crisis is behind us and parts of Europe are actually doing quite well. The "push" is the realization that the opportunities arising from the financial crisis in the US are now largely exhausted and so investors are looking further afield, with Europe being the next target. In other words, US-based investors now view Europe more as an "opportunity" than a "risk".
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2013 — The key finding of this year’s report into global construction disputes is that disputes are taking longer to resolve. Overall, they are now taking over a year to resolve, with the average length of time for a dispute to last in 2012 being 12.8 months, compared to 10.6 months in 2011. This continues the trends for longer disputes - in 2010 disputes were taking 9.1 months to resolve. Whilst dispute durations are getting longer, the value of disputes was broadly stable in 2012. The average value of global construction disputes in 2012 was US$31.7 million, down slightly from US$32.2 million in 2011.
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February, 2013 — Commercial real estate lending markets finished 2012 on a high note, with a flurry of deals closing during the fourth quarter. According to CBRE's analysis of loan closings, total lending volume increased by 18% in Q4 2012 over year-earlier levels. In addition to strong growth in multifamily lending from the agencies (up 36% from 2011 levels), banks and CMBS lenders contributed disproportionately to the overall gains.
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2013 — Optimism has returned to Europe’s real estate industry. Sentiment among industry leaders about the prospects for their businesses is more positive than at any time since 2008, despite the uncertain macroeconomic outlook. Equity for investment in prime commercial real estate is expected to increase, but bank debt is predicted to contract further. Emerging Trends Europe’s respondents are adjusting to this “new normal.” Those with access to capital are focusing on opportunities in areas they know best. They recognize that traditional stock selection and micro asset management skills are crucial to generating returns. The environment offers very little certainty and definitely no quick wins. Europe’s real estate markets continue to be challenging, but all sectors offer new investment potential, too.
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2013 — KPMG and Mergers & Acquisitions magazine conducted a survey of over 300 M&A professionals at U.S. corporations, PE firms, and investment funds immediately after the U.S. election to gain a better understanding of the current M&A market. This publication analyzes the findings of the survey and provides insights into the outlook for M&A in 2013.
For additional news and information, please access KMPG LLP's Web site on the Internet at http://www.us.kpmg.com
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2013 — This report is a primer on raising capital from family offices.
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2013 — The Singapore Family Offices report is a short report on what really makes Singapore such a unique location for family office and fund management activities.
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2012 — The market for real estate secondary transactions has recorded a fourth straight year of record transaction volume, with $2.6 billion of activity during 2012, based on Landmark Partners’ annual global tally. A tenured investor in the real estate secondary market, Landmark continues to aggregate this data through a variety of channels including the firm’s own transaction experience as well as discussions with other market participants.
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2013 — This report was prepared by Property Funds Research and Institutional Real Estate, Inc. The top 20 investment managers in this year’s survey control 57 percent of the aggregate AUM reported by the 137 firms in the survey. The top 10 firms control 36 percent.
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2013 — This article is taken from the March issue of The Institutional Real Estate Letter – Americas and identifies 7 powerful forces that are changing the future of real estate including the decline of defined benefit plans and shrinking office space.
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2013 — This report gives an overview of what is currently happening in the European property markets. It is a compilation of articles previously published in The Institutional Real Estate Estate Letter – Europe that have been pulled together to paint a picture of the opportunity that is out there and the risks surrounding it. The report also ends with a listing of European property transactions.
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Q1/2013 — As we enter 2013, we are more than four years into the Global Financial Crisis. As stated in prior commentaries, PCCP believes we are only 40% of the way through the real estate workout cycle. Our view is consistent with the most prominent recent academic literature, which argues that leverage-induced recessions run 7-9 years (This Time is Different by Reinhart and Rogoff). Anecdotally, it feels like strong financial institutions are starting to invest in earning assets, which in our world means making new loans on commercial real estate (“CRE”). Real estate was hit especially hard and the recovery has been a story of “haves” and “have nots” as we all know. The “haves” are the best customers, with strong balance sheets and trophy real estate, or anyone with a Class A apartment project. The “have nots” are everyone else. But what do the numbers show? We analyzed data on the CRE debt world as a whole and the three largest banks holding CRE debt to see how our anecdotal observations match up against the statistics. We conclude that although CRE lending is showing signs of life for the “haves,” there will still be plenty of opportunity to lend on and invest in the “have nots,” specifically institutional-quality, non-core asset recapitalizations.
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October, 2012 — The fundamental case for infrastructure is grounded in the return potential and inherent characteristics of the asset class—long-lived assets in businesses with high barriers to entry found in monopolistic industries, typically supported by the resilient demand for essential services. The investment opportunities are global, driven by decades of infrastructure neglect in developed economies and the need to build out large scale infrastructure networks in emerging markets.
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September, 2012 — This report on Chinese real estate markets is designed to serve as a reference chart book to help investors systematically review the key data and indicators illuminating the latest changes, trends and themes in the markets. The information is organized in a way that brings together macro- economic, capital markets and sector specific direct market perspectives
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September, 2012 — Recent quarters have shown measured improvement in the United States economy. The current situation, however, contains uncertainty and investors must proceed with what leading economists refer to as “tempered optimism.”1 Allowing this mindset to guide decision‐making creates a “flight to quality,” leading investors to pursue expensive Class A assets and core assets (such as trophy office towers and multi‐family complexes in gateway markets New York City, Boston, Washington D.C., San Francisco and Los Angeles) purchased on historically low cap rates. These premium priced trophy assets attract investors who are looking to allocate equity to perceived stable products, due to an appetite for current yield driven by the record low U.S Treasury bond rates.
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Q3/2012 — U.S. investment returns exhibit consistent growth. The IPD U.S. Quarterly Property Index, which includes tax-exempt and taxable domestic and foreign investors invested in U.S. private equity commercial real estate, produced a total return of 2.5% in 3Q 2012, consisting of 1.4% income and 1.2% appreciation.
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Q3/2012 — IPD Announces 3Q, 2012 Results of the Giliberto-Levy Commercial Mortgage Performance Index. The Index, which tracks private market loans held in investor portfolios, produced a 1.15% total return in 3Q, 2012.
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September, 2012 — The phrase “fiscal cliff” was coined by Ben Bernanke, Chairmen of the Federal Reserve, in describing the impact of budget sequestration and tax increases on the U.S. economy, effectively causing a new recession to occur. The Congressional Budget Offi ce (CBO) agrees. They estimate that the new policies will cause real GDP to contract by 0.3% in 2013. However, the CBO acknowledges the possibility of avoiding the cliff if policymakers adopt alternative solutions. In this paper, we review the various scenarios and evaluate the impact each scenario would likely have on the commercial real estate (CRE) markets.
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August, 2012 — Global economic activity expanded at a measured pace in the first half of 2012. Leading indicators point to a continued deceleration for most major economies. The private sector recovery remains modest in many countries amidst weak sentiment. As the unresolved Eurozone debt crisis looms over the global economy, the path ahead is fraught with uncertainties and risks. However, not all is gloom and doom. While economic prospects for the U.S. and Europe remain muted, Asia will continue to stand out given resilient domestic demand and greater policy options.
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Q2/2012 — KPMG LLP, the audit, tax and advisory firm, surveyed top-level executives in the commercial real estate industry during the second quarter of 2012. Participants were asked about business conditions in their sector, the most significant revenue growth areas, and factors that would impede or support recovery in real estate. These responses were compared to the findings of a similar survey conducted among commercial real estate executives in the second quarter of 2011. For additional news and information, please access KPMG LLP's Web site
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2012 — This report is a guide to assist single and multi-family offices in identifying top fund managers.
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2012 — The past few years have certainly been a testing time for all investors active in the European real estate market. Sovereigns have been on the brink of collapse, economies show little sign of anything remotely approaching a sustained recovery, and the banking system will remain fragile for some considerable time yet. This period of unprecedented volatility has, at times, challenged the very core of the European experiment. Twenty something crisis meetings have come and gone and each has done little to calm the nerves of fractious investors, much less engender any feeling of confidence.
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2012 — This report focuses on China’s property markets, investment trends and opportunities, as well as risks and challenges for institutional investors.
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2012 — This report was prepared by Property Funds Research and Institutional Real Estate, Inc. The top 20 investment managers in this year’s survey control 60 percent of the aggregate AUM reported by the 129 firms in the survey. The top 10 firms control 38 percent.
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2012-2013 — The analysis includes the perspectives of global investors and consultants and will provide you a strong sense of these organizations’ priorities and expectations for infrastructure investment. The survey also will give guidance and clarity to investment managers, including data about investor preference for various products and terms, giving managers the ability to better meet investor appetites.
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September, 2011 — On September 12, 2011, the Investment Committee of the California Public Employees' Retirement System ("CalPERS") Board of Administration ("Investment Committee") earmarked up to $800 million for investment in California infrastructure over a three-year time period. The primary goal of this initiative is to make investments in essential infrastructure assets that meet the risk-return objectives of CalPERS Infrastructure Program ("the Program"), while also potentially benefiting local economic development and essential community services across the state. The Investment Committee instructed staff to develop a plan for outreach to state and local governments to explore the role CalPERS and other pension systems can play in facilitating infrastructure investment in California ("the Outreach Effort").
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1997 — This paper seeks to offer a relatively complete examination of all the issues that pertain to the decision to include, or exclude,real estate as a component of institutional portfolios. This work is the culmination of an in-depth review of the historic and current studies, as evidenced by the six pages of references at the end of this paper. In presenting all the facts and pertinent studies we could uncover, we also offer opinions about how they should be viewed. In all of this, you will find that we work to avoid ‘boosterism’ of real estate, preferring instead to draw the more conservative conclusion from among the possible. In doing so, we believe we can draw a more balanced picture as to why real estate belongs in the world of fiduciary investing.
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According to IREI’s FundTracker database, Q2 2021 was a very good quarter for infrastructure fundraising, with more than $35 billion raised by 16 funds reaching a final close.
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According to IREI's FundTracker database, the COVID-19 pandemic may have finally affected fundraising. Preliminary fourth quarter 2020 numbers show only 14 funds closed and only $13.48 billion in capital raised, the lowest fundraising total since first quarter 2013.
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According to IREI's FundTracker database, preliminary numbers show, infrastructure fundraising in 2020 is inline with previous years.
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According to IREI's FundTracker database, preliminary fourth-quarter numbers show only four fund closings thus far, raising approximately $4.6 billion. There are 18 more funds in the FundTracker database targeting a close by year-end 2020. However, even if all 18 funds close by Dec. 31, fourth quarter 2020 could produce the lowest quarterly fundraising total since fourth quarter 2011.
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According to IREI's FundTracker database, infrastructure fundraising in third quarter 2020 was on par with second quarter, with seven funds raising $16 billion.
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According to IREI's FundTracker database, while preliminary data for the third quarter indicates a drop-off from the previous quarter ($43.4 bilion was raised by funds closing in the second quarter), it is actually an increase on a year-over-year basis. The $20.7 billion raised by funds that closed in third quarter 2020 exceeds the $19.9 billion raised by funds that closed in third quarter 2019.
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According to IREI's FundTracker database, more than 200 infrastructure investment funds are currently seeking capital. Nearly two-thirds of those funds have global or Europe-focused strategies.
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According to IREI's FundTracker, more than 900 funds are currently seeking capital. Approximately 85 percent are focused on North America and Europe.
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According to preliminary data from IREI's FundTracker database, infrastructure fundraising in second quarter 2020 fell considerably compared to first quarter, with eight funds raising more than $13 billion in the second quarter. In First quarter, 14 funds raised more than $39 billion and in fourth quarter 2019, eight funds closed on more than $41 billion.
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According to IREI's FundTracker database, preliminary numbers indicate real estate investment funds closing in second quarter 2020 raised the highest second quarter total since second quarter 2008 and the highest overall quarterly total since first quarter 2019's record-setting $63.7 billion.
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According to the FundTracker database, global/multi-regional infrastructure funds that closed in the past 12 months accounted for two-thirds of the capital raised.
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According to IREI's FundTracker database, investors have favored the relatively safe markets of North America and Europe during the past 12 months, with global funds accounting for just 14 percent of the capital raised by funds closing in that period.
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According to IREI's FundTracker database, preliminary data shows infrastructure fundraising in first quarter 2020 nearly matched fourth quarter 2019, with 14 funds raising more than $39 billion. In fourth quarter 2019, eight funds raised more than $41 billion. Nearly twice the number of funds closed in first quarter 2020 but raised a similar amount of capital as was raised in fourth quarter 2019.
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According to IREI's FundTracker database, preliminary data shows the number of real estate funds closing are down to 22 in first quarter 2020, compared with 35 funds in the first three months of 2017. Many funds were closing when the COVID-19 pandemic was just reaching the U.S., but the pandemic doesn't seem to have skewed the numbers too much as of now.
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According to IREI's FundTracker database, infrastructure funds are continuing to increase in size, fueled by the emergence of the ultra-mega-fund. At the same time, it took a bit longer for the average 2019 infrastructure fund to close than the average 2018 fund.
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According to IREI's FundTracker database, mega-funds have grown exponentially during the past three years, while non-mega funds have remained relatively stable. Although the average mega-fund reaches the final closing a bit faster than the average non-mega fund, all funds are closing in about 17 months, on average.
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According to IREI’s FundTracker database, infrastructure fundraising in fourth quarter 2019 far outpaced previous quarters during the year, with eight funds raising more than $41 billion.
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According to IREI's FundTracker database, after a record-setting start to the year, fundraising fizzled in the second half of 2019. Preliminary data shows fundraising totaled $119.2 billion for the last year.
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According to IREI’s FundTracker database, preliminary numbers show infrastructure fundraising in 2019 has outpaced previous years.
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According to IREI’s FundTracker database, preliminary numbers show only nine fund closings have occurred during the fourth quarter, accounting for $6.3 billion.
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According to IREI’s FundTracker database, infrastructure investment managers closed eight funds in third quarter 2019, raising more than $8.1 billion.
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According to IREI’s FundTracker database, decline in real estate fund closings is taking a more dramatic downturn with approximately 16 funds closing in third quarter 2019, compared to 23 funds in second quarter 2019 and 28 in first quarter 2019.
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According to IREI’s FundTracker database, close to 200 infrastructure funds are currently open for investment. Europe and Global/Multi-regional strategies combine for approximately 60 percent of those funds, but other regions are also seeing a fair amount of activity.
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According to IREI’s FundTracker database, there are approximately 800 real estate investment funds currently seeking capital. Slightly more than half are closed-end funds, with the rest being open-end or semi-open funds.
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According to IREI’s FundTracker database, infrastructure investment managers closed nine funds in Q2 2019, raising nearly $16.3 billion. Our preliminary data finds that fewer funds are raising less capital compared to Q2 2018, when 15 funds held final closings, raising more than $19 billion.
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According to IREI’s FundTracker database, roughly $17.4b was raised in Q2 2019, based on preliminary data. Thanks to a number of large mega-funds, record fundraising activity was registered in Q1 2019, which will likely push first-half 2019 volume to a record high once final Q2 data is available.
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According to IREI’s FundTracker database, more than half the capital raised by infrastructure funds reaching a final close during the past three years, the past 12 months and YTD 2019 went to global or multi-regional strategies.
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According to IREI’s FundTracker, global/multi-regional funds are leading the fundraising pack, accounting for more than 70 percent of the capital raised by funds reaching a final close year-to-date 2019.
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Two super-mega-funds sponsored by Blackstone and Brookfield raised $17.3 billion and $15.0 billion, respectively, pushing first quarter 2019 fundraising volume to a record total.
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The average size of an infrastructure private equity fund increased slightly in 2018 — to $2.0 billion — but the average closing time decreased to 17.1 months compared with 20.7 months in 2017.
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With the proliferation of mega-funds, the average fund size climbed to $801 million in 2018, up from $590 million two years ago.
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Only three infrastructure funds held final closings in fourth quarter through Dec. 4, but their capital totals helped push infrastructure fundraising to new heights in 2018.
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With nearly $100 billion raised in the first three quarters of the year, the 2018 12-month total has a chance to break the all-time record of $134.9 billion set in 2008.
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The ever expanding size of funds in infrastructure markets is a trend that isn’t likely to end anytime soon. In fact, the definition of mega-funds — those funds with final closes of $2 billion or more — might need to be updated to reflect funds that are increasingly targeting $10s of billions in capital commitments.
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Year-to-date, 35 infrastructure funds have closed with more than $69.4 billion raised, which already puts 2018 in the record books as the year with the highest 12-month fundraising volume.
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According to the IREI FundTracker database, funds reaching a final close in third quarter 2018 raised a total of $28.6 billion compared to $18.3 billion raised during third quarter 2017.
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According to IREI’s FundTracker database, 288 infrastructure investment funds are currently marketing. Of those, 37 are open-end, six are semi-closed-end (having a long but finite fundraising period), and the remaining are closed-end.
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According to the IREI FundTracker database, there are 336 open-end funds, 460 closed-end funds and 36 semi-closed end (has a 7- to 10-year fundraising window) funds currently soliciting capital.
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According to IREI’s FundTracker database, infrastructure mega-funds have accounted for 76 percent of the capital raised, as of Aug. 1, 2018. In addition, more mega-funds have already closed YTD than in any of the past five years.
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According to the FundTracker database, 2018 fundraising is ahead of 2017, thanks to the increasing size of large mega-funds that have closed year to date.
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According to IREI’s FundTracker database, infrastructure fundraising is on pace to have a very good year. If the second half proves as positive as the first, it could even be a record year.
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According to the FundTracker database, real estate investment fundraising in the first half of 2018 is tracking well ahead of the first half of 2017 and 2016. If fundraising continues at the same pace it has in previous years, total commitments in 2018 could top those of the record-setting 2015.
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In 2016, 16 percent of the infrastructure funds reaching a final closing were debt funds. Last year, that percentage fell to 7 percent. When looking at capital raised, 2016 saw 8 percent of the total capital coming from debt funds. In 2017, that total fell to 5 percent. The trend looks to be continuing into 2018.
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According to the IREI FundTracker database, real estate investment funds with a debt component accounted for 28 percent of the funds reaching final close in 2017, up from 2016’s 22 percent share. They also accounted for 44 percent of the capital raised in 2017, versus 32 percent in 2016.
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According to the IREI FundTracker database, investors are showing a strong preference for regionally focused funds, with global funds continuing to raise less capital than other strategies.
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According to IREI’s FundTracker database, global funds account for 41 percent of the capital raised YTD 2018 in funds reaching a final closing. In 2017, global funds accounted for only 18 percent of the capital raised.
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According to the IREI FundTracker database, private equity infrastructure funds closing in first quarter 2018 raised significantly less capital than those closing first quarter 2017. If things continue in this direction, it will add 2018 to the ebb and flow pattern seen since at least 2013, where odd number years are good for infrastructure fundraising, and even numbered years not so good.
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According to IREI’s FundTracker database, more capital was raised by real estate investment funds closing in Q1/2018 than in any first quarter since 2015.
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According to data from IREI’s FundTracker database, infrastructure funds are continuing to grow in size, with the largest dominating the market. Funds raising more than $2 billion accounted for 74 percent of the capital raised, while funds raising $3 billion or more brought in 56 percent of the capital. Those raising less than $500 million accounted for only 4 percent of the total capital raised.
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During the past three years, more than 60 percent of capital was raised by mega-funds. Funds raising less than $500 million accounted for about 60 percent of the number of funds, but less than 20 percent of the capital raised.
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According to IREI’s FundTracker database, infrastructure funds took a bit more time to close in 2017 than they did in 2016. Averages can be deceiving, however, as both the two fastest and two slowest closing funds were European.
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According to IREI’s FundTrack database, real estate funds holding a final close in 2017 were on offer for about 18.0 months. This compares to 18.7 months in both 2014 and 2015, and 19 months in 2016. Trimmed averages confirm that marketing times are inching down, with 2017’s trimmed mean coming in at 17.1 months compared to 17.7 months and 17.6 months in 2015 and 2016, respectively.
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According to IREI’s FundTracker database, preliminary 2017 numbers indicate that infrastructure fundraising has continued its ebb and flow fundraising pattern, with 2014 being a down year, 2015 being up, 2016 being down and 2017 being up again. During this time, the market is moving in an overall upward direction.
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According to IREI’s FundTracker database, only 19 funds have reported a final closing so far in Q4 2017, with an aggregate total of capital raised coming in at $13.6 billion. This is significantly fewer than the number of funds closed in Q4 2016, as well as significantly less capital raised.
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According to IREI’s FundTracker database, 2017 infrastructure fundraising is very similar to that of 2016. Total aggregate capital raised, total number of funds closed, average size of funds and other 2017 metrics are nearly the same as 2016.
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TrendWatch updates a few of the charts used during the year and finds investors continuing to move to the defensive end of the spectrum, investment funds continuing to grow in size, mega-funds continuing to dominate, and investment totals continuing to trend down.
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Based on capital raised by infrastructure funds holding a final closing in the past three years, just five managers have raised 35 percent of the capital, despite being only 8 percent of the managers sponsoring funds closing since Jan. 1, 2015. The top 10 managers brought in 51 percent of the capital.
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According to the Global Investment Managers 2017 survey, the top 20 real estate investment firms now control more than half of the world’s real estate assets under management. These firms increased their market share by 1 percent year-over-year, which is pretty significant when based on the $3 trillion in assets under management reported by the 199 firms responding to the survey.
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We’re three-quarters of the way through 2017, and it appears that 2017 infrastructure fundraising has a very good chance of coming in ahead of 2016, and is enticingly close to surpassing 2015, as well. In addition, the average size of funds reaching final closing is continuing to grow.
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Early third quarter numbers are in, and they continue to point to 2017 being a down year for real estate investment funds when compared to 2015 and 2016. The amount of capital raised, number of funds reaching a final close and the average size of the funds were all down in Q3/17, as well as in the first three quarters combined, when compared to the same time periods in previous years.
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According to IREI’s FundTracker database, more than two-thirds of the infrastructure funds launched since the beginning of 2014 are still seeking investors. Europe is favored when looking at sheer numbers of funds, but global strategies jump to the top when looking at the amount of capital sought.
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More than 900 private equity real estate funds are currently in the marketing phase of their lifecycle, with about two-thirds of those being closed-end funds. One third of the funds in the market were launched in 2016 or 2017, but more than 160 closed-end funds were first offered prior to 2014.
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According to IREI’s FundTracker database, nearly four-fifths of capital raised by infrastructure funds holding a final close in 2017 has been committed to a mega-fund — those funds raising $2 billion or more. Average mega-fund size is continuing to increase, as is the range between the smallest and largest mega-funds.
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Although mega-funds have raised 62 percent of the capital raised by funds holding a final close since the beginning of 2017, their average size has decreased significantly.
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According to the IREI FundTracker database, less than $3 billion was raised by infrastructure funds reaching a final close in the second quarter of 2017. Thanks to the $15.8 billion GIP III fund closing in the first quarter, first half 2017 is still well ahead of first half 2016, but fundraising trends don’t bode well for the rest of the year.
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According to IREI’s FundTracker database, infrastructure debt funds are having trouble gaining traction. They accounted for less than 8% of the capital raised by infrastructure funds reaching a final close in 2016. So far in 2017, they have failed to show up at all, with no debt fund closing year to date.
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According to IREI’s FundTracker database, debt-only funds plus funds with a debt component made up 40 percent of the capital closed in 2014. That market share has fallen each year until it now stands at just 27 percent of capital raised YTD 2017.
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According to the IREI FundTracker database, global infrastructure funds have grown both in size and market share during the past three years and are currently dominating the infrastructure fundraising market. In contrast, U.S. funds have seen their share of the market fall to just 12 percent in 2016, and less than 1 percent YTD 2017.
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According to IREI’s FundTracker database, market share for global/multi-regional funds has fallen since 2015, and is now surpassed by both North American– and Europe-focused funds.
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Fundraising totals for infrastructure funds reaching final closing in first quarter 2017 reached more than $30 billion, according to IREI’s FundTracker database. One fund accounted for more than half this total.
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According to IREI’s FundTracker database, fundraising totals are significantly down in the first quarter of 2017 when compared to the same periods of 2015 and 2016. These first quarter numbers are preliminary and will change as additional data is captured, but it is unlikely first quarter 2017 will approach the total of first quarter 2016, which itself was lower than the total raised in first quarter 2015.
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According to IREI’s FundTracker database, infrastructure mega-funds — those $2 billion or more in size — have accounted for 70 percent of the capital raised by closed funds since 2014. These funds have increased their market share each year since 2012, and are on track to continue this trend into 2017.
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March, 2017 — According to IREI’s FundTracker database, mega-funds are still raising more than their fair share of capital, with their three-year rolling averages continuing to trend upward. However, their percentage of the total market fell in 2016 versus 2015.
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February, 2017 — According to the IREI FundTracker database, infrastructure funds reaching final closing in 2016 were in the market almost 20 percent longer than those closing in 2015. Their 18.2-month average was the longest since 2012.
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February, 2017 — According to IREI’s FundTracker database, real estate funds holding a final closing in 2016 were only in the market, start to finish, for about 18 months, on average. Global funds, debt funds and mega-funds all reached a final closing significantly sooner than the mean.
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January, 2017 — According to IREI’s FundTracker database, infrastructure funds reaching final close in 2016 raised an aggregate of $56.4 billion, coming in slightly ahead of 2015’s total. Mega-funds accounted for 33 percent of all funds closed, while raising 75 percent of the year’s total capital.
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January, 2017 — According to IREI’s FundTracker database, 2016 was a solid, but not spectacular, fundraising year, with annual capital raised coming in at $90 billion, well short of 2015’s $110 billion total.
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December, 2016 — 2016 is turning out to look like a repeat of 2015 in the infrastructure fundraising arena. The number of funds closed and capital raised are the same, or nearly the same, YTD 2016 as that of 2015. Other metrics also bring a sense of déjà vu.
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December, 2016 — According to IREI’s FundTracker database, 2016 is trailing 2015’s fundraising totals by about $25 billion. In addition, investors are looking toward more defensive strategies, such as debt funds, and stepping back a bit from higher-return strategies.
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November, 2016 — According to the IREI FundTracker database, the top infrastructure managers continue to control an outsized share of the market, with sponsors of the five largest funds accounting for nearly one-quarter of the capital raised since 2014. Sponsors of the 10 largest funds closing in that time account for about 38 percent of the capital raised.
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November, 2016 — According to IREI’s FundTracker, the real estate investment industry grew about 13 percent by year-end 2015. As in past years, much of the growth was consolidated in a few top firms, with the top two firms alone being responsible for more than 10 percent of the world’s AUM.
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October, 2016 — According to IREI’s FundTracker, infrastructure funds closing in third quarter 2016 raised $21.7 billion, bringing the yearly total to $43.8 billion.
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October, 2016 — Continuing the trend found in the first two quarters of 2016, fewer funds reached final closing, and less capital was raised, in third quarter 2016 than in third quarter 2015. Two funds were responsible for 40 percent of the capital raised in that quarter.
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September, 2016 — According to IREI’s TrendWatch, 52 percent of the infrastructure funds reaching final close since Jan. 1, 2014, focused on energy strategies. Energy funds also account for 46 percent of infrastructure funds launched in that time period.
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September, 2016 — According to IREI’s FundTracker database, diversified funds accounted for 42 percent of the real estate funds closed, and 52 percent of the capital raised, since Jan. 1, 2015. The second most-popular sector focus was debt, followed by residential funds.
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August, 2016 — Infrastructure mega-funds have accounted for 78 percent of capital raised by infrastructure funds closing year-to-date 2016. One fund accounted for nearly 38 percent of all capital raised YTD.
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August, 2016 — Mega-funds, which accounted for 66 percent of the capital closed in 2015 only account for 55 percent so far this year. They are also taking slightly longer to close than in previous years.
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July, 2016 — Funds closing in second quarter 2016 raised only 34 percent of capital raised by funds closing in the same time period of 2015. Based on amount of capital raised YTD, 2016 is proving to be a very slow year for infrastructure.
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July, 2016 — The trend of fewer real estate investment funds raising larger amounts of capital is continuing quarter-over-quarter and year-over-year. When looking at funds holding final closes in second quarter 2016, three of the 24 funds closed accounted for 55 percent of the capital raised.
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June, 2016 — In the past 30 months, infrastructure funds holding a final closing have raised $124.3 billion. Just $9.4 billion of that total came from debt funds. So far in 2016, only one debt fund has closed, raising $647 million for Europe infrastructure.
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June, 2016 — According to IREI’s FundTracker database, the amount of capital raised by debt funds has slowed but, because the entire fundraising market has slowed, their market share has increased. North America and Europe continue to attract the lion’s share of interest.
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May, 2016 — Based on YTD data, 2016 is looking like it will be a weak fundraising year for infrastructure. Amount of capital raised by funds closed, amount of capital targeted by nearly launched funds, and absolute number of funds launched and closed are all down year-over-year — as well as down year over multiple years.
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May, 2016 — Only 62 funds have launched this year compared to 101 during the same time period last year, and only 34 funds have closed versus 41 at this time in 2015. North America, in particular, has seen a fall off in interest.
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April, 2014 — According to preliminary first quarter 2016 numbers, the number of infrastructure funds reaching a final close in the first quarter has continued to decrease while the size of those funds has increased. In addition, the time from launch to final closing is increasing.
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April, 2016 — Based on early numbers for first quarter 2016, real estate fundraising is chugging along at a steady pace, with amounts raised in Q1/15 and Q1/16 being nearly identical. Higher-return strategies dominate as investors look to meet return objectives.
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March, 2016 — In 2013, the average infrastructure fund closed at $1.6 billion. By 2015, that average had increased to $2.2 billion. Despite the fact that non-mega funds grew to almost $1 billion on average, mega-funds still accounted for 72 percent of the capital raised by funds closing in 2015.
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March, 2016 — Mega-funds continue to take market share from smaller funds. In 2015, funds that closed with $1 billion or more in commitments accounted for 22 percent of all funds closed and 69 percent of the capital raised.
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February, 2016 — The amount of time the average fund takes from beginning to final close has crept up over the past year. Funds focused on North America and/or energy, however, closed more than 33 percent faster than the overall average.
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February, 2016 — According to IREI’s FundTracker database, the amount of time real estate funds are in the market has fallen steadily since 2013. Large funds, global funds and higher-return funds had the shortest closing times.
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January, 2016 — According to IREI’s FundTracker database, infrastructure investors can choose from more than 275 funds now in the market. Investment options range from debt to equity, from open-end to closed-end, from regionally focused to globally focused, and much more.
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January, 2016 — According to IREI’s FundTracker, investors have more choices than ever when it comes to placing their real estate allocations. The number of funds currently marketing has grown, as has the amount of capital being sought, the number of regions being targeted and the types of structure available to investors.
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January, 2016 — According to FundTracker, the 21 infrastructure funds closing in 2015 raised about $45 billion. In 2014, 32 funds raised $45.1 billion. Both years are a drop from 2013’s $52 billion raise, but both still represent a significant amount of capital looking for deals.
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January, 2016 — Thanks to Blackstone’s $15.8 billion fund close, 4Q/15 fundraising totals surpassed those of 4Q/14, and took 2015’s total capital raised past the $100 billion mark.
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December, 2016 — As 2015 winds down, investors and managers are looking back with a sigh of relief. 2014 had been a very good year for real estate, and there was some skepticism that the good times would continue. But they did.
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December, 2016 — According to FundTracker, the average size of all funds having final closings in the past three years is still growing — increasing from $507 million in 2013 to $883 million YTD 2015. Much of this increase, however, is due to the increasing size of mega-funds, which came in at $1.8 billion in 2013 and $2.7 billion YTD 2015.
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December, 2015 — TrendWatch tracked open-end funds launched since the beginning of 2011. The number launched each year grew through 2013, then began a slide that mirrored the growth years.
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December, 2015 — According to IREI's FundTracker database, 74 percent of all capital raised by funds closed year-to-date has been for higher-return strategies. In addition, the average fund size of higher-return funds is more than double that of lower-return or mid-return funds.
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November, 2015 — The need for modern infrastructure is wide and varied, but only three fund strategies are catching investors’ attention — energy, diversified and debt.
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November, 2015 — Despite investors often voicing a preference for sector-specific funds, the vast majority of real estate investment funds are diversified across all sectors. Another large percentage have mandates for two sectors. Few are truly sector-specific.
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November, 2015 — Despite the interest in infrastructure financing, only six infrastructure debt funds have closed since Jan. 1, 2013, according to IREI’s FundTracker. In total, these funds raised less than $10 billion.
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October, 2017 — Based on FundTracker data, real estate debt funds have become a significant part of the market. The amount of capital raised by funds with a debt component is significantly greater than their numbers would indicate.
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October, 2015 — TrendWatch finds that more infrastructure funds are launched in January than any other month. October is the most popular month for fund closings, while funds closed in April raised the most capital.
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October, 2016 — During the past four years, more funds were launched in January than any other month of the year. In fact, more than double the number of funds were launched in the first month of the year than in June, the second most popular month. June turns out to be the second most-popular month for closings, as well.
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October, 2015 — According to TrendWatch, only 25 infrastructure funds have been launched this year compared to 46 at this same time in 2014 and 61 at the end of third quarter 2013.
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September, 2015 — So far in 2015, 110 new real estate funds have launched, seeking an aggregate total of more than $50 billion. Of those funds, nearly 80 percent are focused on North America and Europe.
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September, 2015 — Despite a dearth of traditional infrastructure deals (i.e. anything except energy), the United States continues to attract more than 60 percent of the infrastructure capital raised by funds closed since 2013.
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September, 2015 — According to the Global Investment Managers 2015 survey, the top 20 real estate investment managers now control more than 50 percent of the total real estate AUM — and if trends continue, they’ll control even more next year as all firms in the top 10 have increased their AUM each year for the past two years.
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September, 2015 — According to IREI's FundTracker database, infrastructure funds launched since 2013 have been highly successful in meeting their goals, with the total raise reaching 71% of the total target. Only 32% of those funds have held final closings, but of the closed funds, 66% were oversubscribed.
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August, 2015 — According to data from FundTracker, 8 percent of the funds launched since 2013 have been sponsored by emerging managers. While the maximum fund size for funds launched by established managers is nearly 87 percent larger than the average emerging manager's fund size, most of the other data indicates that emerging managers are doing just as well as established managers when it comes to accessing capital.
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August, 2015 — According to the IREI FundTracker, the number of infrastructure funds launched in first half 2015 has fallen by 39 percent compared to the number launched in first half 2014. The number of funds closed has also fallen, though the amount of capital raised has increased.
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August, 2015 — According to the IREI FundTracker, the first half of 2015 is a bit mixed when compared to the first half 2014. Fewer funds launched in 1H15 than in 1H14, but more funds have closed this year than last. The amount of capital raised in the first half of 2015 is about 37 percent more than that raised in the same period in 2014.
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August, 2015 — Energy funds have accounted for 57 percent of the total infrastructure funds launched and closed over the past three years, as measured by targeted and raised capital. And the attraction has increased each year, to the point that nearly all new funds launched in 2015 are energy focused. Where does this leave the other infrastructure sectors?
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July, 2015 — Mega-funds are capturing a larger market share than ever before. They now account for about 14 percent of the funds closed but about 65 percent of the capital raised YTD 2015.
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July, 2015 — Based on the infrastructure funds that have closed YTD 2015, the average fundraising period has fallen to less than a year. Americas-focused infrastructure funds closed in the shortest amount of time among the regions, while energy funds led the sectors.
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July, 2015 — Based on the funds that have closed YTD 2015, the average time for a fund to be in the market is now a little less than 17 months, compared to a little more than 17 months for all of 2014. Global funds, debt funds and mega funds are finding the most acceptance.
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July, 2015 — According to the IREI FundTracker database, the number of infrastructure funds launched during 2015 has slowed dramatically compared to previous years. The average fund size, however, remains well over $1 billion. To no one’s surprise, nearly all newly launched infrastructure funds are focused on the energy or renewables sector. For more details on what is going on in the market — and why investors are constantly in play, view the report.
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June, 2015 — With real estate reaching pre-recession levels in the major gateway cities and moving in the right direction in secondary regions, it is safe to say that real estate is back, and with it, funds are seeing a strong resurgence. According to the IREI FundTracker database, there are at least 25 more funds being marketed now than there were in January. For more details on what is in the market — and why investors will undoubtedly find their phones ringing nonstop this year.
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Urban logistics assets are generally utilised to provide the “last-mile” fulfillment for ecommerce operators. They have risen in importance due to ever-shortening delivery time expectations, as well as various new entrants to the market, such as grocery retailers. In addition to ecommerce, smaller-format units are generally favoured by traditional industrial operators as well. This has already translated into much higher rental growth for urban logistics when compared with their big-box peers. Data produced by Property Markets Analysis, shows that urban logistics rents were almost 40 percent higher in 2020 than they were in 2007 — while other logistics rents have not progressed much over the past decade.
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ESG has moved from being a nice-to-have, to being an important part of infrastructure investing and can be used to drive action and outcomes. Today, the options for institutional investors to gain exposure to ESG have never been greater, with public markets seeing net new money into sustainable investment funds increase. In the following interview, Bronte Somes, Head of Infrastructure Equity Europe and Declan O’Brien, Head of Infrastructure Research & Strategy discuss ESG’s impact on infrastructure investing.
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The DIGITAL (Demographics, Innovation, Globalisation, Infrastructure, Technology, Active over the Long-term) trends that have so profoundly impacted the U.S. and listed real estate markets are starting to exert their influence on Europe.
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Real asset investors have been increasingly focused on inflation. In this paper, BlackRock discusses their views on inflation, whether it is transitory and where it will go. More importantly, BlackRock discusses the reasons why real assets may perform well in periods of higher inflation, and tools and strategies real assets investors should deploy in a higher inflationary environment.
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Regan Smith, managing director of real estate sustainability, explores why climate resilience management is vital in the face of climate change and the initiatives that can be undertaken in real estate portfolios and management practices.
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In a world searching for yield opportunities, we believe that more investors are coming to appreciate the balanced mix of favorable characteristics that U.S. real estate can add to a diversified investment portfolio. In addition to sustainable income, the world’s largest commercial real estate market may also offer investors an attractive combination of resiliency and value.
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Since the onset of COVID-19, we have provided timely updates on the pandemic; however, given the strong progress of the U.S. vaccination program, many investors are now turning their attention to the future and focusing on a resumption of business as usual. While the markets will likely remain dynamic in their evolution around the pandemic, the following includes several of the issues we have contemplated recently that relate to the path ahead.
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While the stuttering pandemic situation will weigh on near-term growth, the outlook for real estate in APAC is more sanguine. Demand for commercial real estate is expected to reverse into positive territory across most markets by the end of 2021. Investment activity in the logistics segment will be partly driven by the availability of quality stock. Investors could benefit from increased exposure to emerging segments.
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The office sector faces unique challenges during the coming decade. In this special report, Principal examines the return to a new normal for the office property type and what it means for real estate investors going forward.
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In 2019, we studied the income segments for renter households to ascertain the demographic driver for the multifamily industry. Since then, the country has endured an unexpected recession caused by a global pandemic, which has disrupted the economy but ultimately reinforced underlying trends. Despite recent market turbulence, this update to the original analysis continues to demonstrate that MiMis, or millennials and middle income households, will sustain demand for U.S. apartments in the coming decade. We define middle income households as those earning between 80% and 120% of area median income which is typically those earning between $45,000 and $75,000 per annum. These households comprise between 15% and 25% of each age cohort. Middle income households often have to rent out of necessity which creates consistent demand for apartments targeting middle income renters.
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As the commercial real estate (CRE) sector enters a second year of the global pandemic, it’s no surprise investor surveys report a continued interest in CRE debt vehicles. Not a single investor wanted to reduce their exposure to debt according to the 2020 INREV/ANREV/PREA survey covering CRE debt vehicles. It also reported that more investors were spreading their exposure by using a combination of debt funds across North America, Europe and Asia Pacific.
In a marketplace where managing risk has become increasingly important, that makes perfect sense. With uncertainty over the economic outlook remaining high, the appeal of private commercial real estate debt should continue to increase as investors pivot to investments that offer reliable cash flows and downside risk protection.
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Economic recovery is well underway in Europe, although the Delta variant dampens some of the promise from the first half of the year. Investor sentiment is more resilient than the underlying occupier markets, but is heavily targeted towards the “beds, sheds and meds” sectors. We continue to expect stronger returns away from the most crowded part of the market, or through development targeting markets and sectors with the strongest occupational dynamics.
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US economic recovery is pushing through the lingering headwinds of virus variants and sluggish job growth. A year of pent-up demand is powering progress in necessity-driven asset classes.
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Strong economic recovery, but Delta variant poses a threat. Office and retail sectors continue to have hardships, but more dynamic sub-segments have upside surprise factors. Post-pandemic pent-up demand is supporting the multifamily sector. Logistics continues to outpace expectations and is expected to have staying power.
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Manulife's U.S. commercial real estate outlook reveals the latest across the markets for investment, office, industrial, and multiresidential properties.
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Manulife's Canadian commercial real estate outlook reveals the latest developments across office, industrial, retail, and multifamily property markets.
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Employment rose during the second quarter of 2021 in 45 of the 48 real estate markets Principal tracks. Our “DIGITAL” sum of markets – those with key long-term growth drivers centered around DIGITAL (Demographics, Innovation, Globalization, Infrastructure, And Technology) – exceeded the national average during the past quarter. We still anticipate that many markets will fully rebound by 2023, with “DIGITAL” markets recovering quicker.
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Our last paper explored the structural trends driving demand for prime logistics space. Given that demand will remain strong in the foreseeable future, our focus now turns to the implications for new supply. The transformation of logistics real estate development has followed a compelling trajectory. Clear insight into the structural forces that shape supply trends allows customers to better navigate scarcity and prepare for demand-side shifts.
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The COVID-19 pandemic has uniquely affected workers as it forced millions into remote roles for the first time. Yet, despite the rise of telecommuting and advancements in digital communication over the past two decades, migration trends across the nation have actually been in decline after peaking in the 1980’s. We wonder: Has the COVID-19 pandemic reversed this secular trend or will it be a temporary black swan event?
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces—urbanization, digitalization and demographics—that have changed the way we live, work and shop.This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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Our research indicates that real estate exposure has historically provided an effective hedge against inflation. In contrast, other traditional long-only investments such as stocks, nominal bonds, and even listed REITs tend to be negatively impacted during inflationary environments. Further, direct real estate exposure provides a strong total return profile relative to other alternative investments.
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Quantifies the impact on the pandemic in shifting movement within markets, as suburban areas benefitted from increased urban outflows in 2020. We expect this activity to revert closer to pre-pandemic levels as the economy reopens, and continue to monitor these trends closely. This piece also suggests that net migration across markets in 2020 was largely consistent with pre-pandemic trends, and headlines suggesting otherwise were often misleading.
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Ongoing disruption is driving a shortage of raw building materials, resulting in increased input prices and extended lead times. Materials shortages are already resulting in development cost increases and project delays in the industrial sector. With the backdrop of surging demand for industrial space, the white paper evaluates concerns that construction material shortages could tap the brakes on construction activity. Competition for modern, well-located facilities combined with increased construction costs, suggests rents will continue to accelerate.
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Over the last few years, the private equity industry has radically reassessed the importance and value of ESG to their businesses. ESG has shifted from being considered an area of just compliance, to an overarching framework that informs the strategic thinking of many private equity firms - creating value and giving firms a competitive edge. In this edition of Green News & Views, we explore how our Multi-Managers Private Equity business has integrated ESG throughout the entire investment lifecycle from sourcing, investment due diligence, to the ongoing monitoring and reporting on investments.
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In this report, we take a look at the current state of the U.S. housing market, specifically digging into the details of the growing imbalances in for-sale and for-lease inventory and what we expect to see in the coming years. While this is not a new story, the current disparities between supply and demand in both for-sale and for-lease markets have reached record highs. Some factors contributing to the acceleration of demand for single-family homes (like the pandemic) may go away, but even if supply increases and demand stabilizes tomorrow it may take 1-2 years to normalize inventory to 2018-19 levels. We expect the effects of these supply-demand imbalances will persist and only gradually reverse over time. It may be several quarters before we see more normal rates of growth in home prices and rents.
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At its meeting last week, the Federal Open Market Committee (FOMC) changed the Federal Reserve's forecast "dot plot" of short-term interest rate expectations, increasing the median forecast to two rate hikes in 2023 versus none in the last March meeting. Read about some implications for commercial real estate.
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After a tough start to the year there are some causes for optimism for the European economy and real estate markets. The vaccine rollout is finally gathering steam, giving hope that some degree of normalization can be achieved in the second half of the year. Capital markets remain healthy, although in-demand sectors and assets are seeing heavy price inflation. Sourcing value will be a key challenge for the rest of 2021.
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As summer approaches, we expect the US will make progress in the slow process of reopening. With that renewal, markets are starting to move again as well. By autumn, real estate investors should gain insight from increasing comparable leases and sales.
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What to do in a negative-yield world? UBS's Declan O’Brien, Head of Infrastructure Research and Strategy and Perry Offutt, Head of Infrastructure Americas, give a deep-dive into the evolving and emerging infrastructure sector and the role it can play in investors’ portfolios.
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Global real estate markets are still coming to terms with the economic fallout from the pandemic, but showed a strong performance in the first quarter, driven by the industrial sector. In Europe, the vaccine rollout is finally gathering steam, giving hope that some degree of normalization can be achieved in the second half of the year. In the US, markets are all starting to move, and investors should gain insight from increasing comparable leases and sales. While in APAC, growth prospects have been largely based on the resumption of global demand.
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REITs have spearheaded the growth of real estate investors into non-traditional property types. The U.S. institutional private real estate market is also rapidly expanding into these property types and we anticipate a material allocation to non-traditional properties in the future.
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Out of a crisis comes opportunity. Given our assessment of the outlook for global and regional estate markets, we identify these opportunities as being among the most attractive on a risk-adjusted basis over the next 12 months.
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With vaccinations making steady progress, the near-term outlook for the U.S. economy is as bright as it’s been in three decades. However, risks remain—and the recovery will be uneven across and within markets and sectors. The Barings Real Estate team weighs in.
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Property investors and their lenders are shifting down the risk curve and becoming highly selective about sector exposures and asset quality. The Barings Real Estate team weighs in on how these trends will drive opportunities through 2021 and beyond.
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces -- urbanization, digitalization and demographics -- that have changed the way we live, work and shop. This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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After enduring a torrid COVID-19 driven winter surge, the UK is finally beginning to see light at the end of the tunnel. Rapid and widespread vaccination has helped dramatically lower caseloads and fatality levels, enabling the economy to gradually re-open.
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Sustainable infrastructure investments play a driving role in decarbonization, improving livelihoods and economies. For infrastructure investors, factoring in financially relevant sustainability information can lead to better investment decisions. Multi-Manager Infrastructure have outlined their top 5 factors to consider when integrating ESG in the investment process. Through integrating these 5 factors, the business can promote sustainable long-term growth which can benefit companies, investors and creates greater impact in the industry at large.
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Increased transaction activity late last year reflects pent-up investor demand for real estate assets, with a clear preference for industrial and apartments as 2021 begins. We expect retail and office to continue to face headwinds even as the economy improves.
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The European economy ends 2020 fairly battered and bruised as the second wave of the COVID-19 pandemic hit hard, both in terms of infections and the wider economy. Offices are showing some weakness on the occupier side, while retail continues to struggle. Logistics has been going from strength to strength, however, as have alternative sectors such as residential. Overall, capital markets remain buoyant as there is significant dry powder targeting real assets.
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In this global report, PGIM looks at the underlying demand for data centers and examines how, based on current trends, the sector is set to grow significantly in the coming years.
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PGIM's Investment Research team identifies the nine major occupier and investment trends expected to influence market conditions and investment performance in 2021 and beyond.
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Learn more about the trends and themes shaping the real estate market today in Nuveen Real Estate’s latest commentary: Perspectives in today’s real estate market.
Developed by Nuveen’s market leading research team, you’ll gain a deep dive into global, regional and sector trends and learn why we believe strategic allocation of real estate is the right choice for long-term investment benefit.
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Climate change poses a complex set of investment risks and opportunities for real estate portfolios. Nuveen Real Estate’s net zero carbon pathway highlights our robust framework for anticipating, evaluating and addressing issues before value corrections erode financial performance.
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Are real estate investors already invested in infrastructure? While optimism mounts and recovery begins, the ever-present challenges for long-term investors remain—the need for income, portfolio diversification and capital growth. Read more in Principal's newest issue of The Decisive Eye.
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The global pandemic has forever altered the logistics real estate landscape: supply chain decisions have become more holistic, more data-driven and more urgent than ever. Underlying this shift are the same forces—urbanization, digitalization and demographics—that have changed the way we live, work and shop.
This report aims to separate the transitory nature of human and company behavior during the pandemic from the real lasting forces that will continue to drive the supply chains of the future.
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Capital markets are increasingly penciling in a higher interest rate scenario as reflected in a sharp steepening in the Treasury yield curve over the past 30 days. The yield on the 10-year bond has increased by 40 bps over the past 30 days. Capital markets anticipate a continued increase in benchmark 10-year yield, which has resulted in elevated volatility in public risk assets as well as growing questions on appropriate risk premia from illiquid investments. What does this mean for real estate? How will the different property types respond?
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The rollout of vaccines gives rise to cautious optimism that the economy will improve in the second half of the year as lockdowns can be lifted. Real estate investment activity has shown some pick-up but remains below pre-pandemic levels. Logistics property remains the focus for the main commercial sectors, with interest in niche and specialist real estate types being driven higher.
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The economic disruption caused by the pandemic brings new and unique opportunities for US real estate investors. Some weakness should persist into 2021 as effects from the pandemic and 2020 recession ripple through society and the economy. As the year progresses, positive news on vaccine distribution, competitive lending markets, and fiscal stimulus should support a meaningful rebound in economic growth and a turnaround in aggregate real estate performance.
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This paper examines real estate market fundamentals and key themes to watch in 2021.
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We are excited to share our new bi-annual sector report featuring insights from investment professionals across all four real estate quadrants and providing current conditions and outlooks for all of the core real estate sectors, as well as emerging sectors such as data centers and life sciences.
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Real estate investment activity has shown some pick-up but remains below pre-pandemic levels. The retail and office sectors continue to face headwinds even as the economy improves, while logistics remains the focus for the main commercial sectors. Investors should remain on the lookout for tactical opportunities arising from the pandemic.
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The long shadow of COVID-19 continues to impact Real Estate everywhere, not least in Europe where vaccination programmes have had a rocky start. However, as we reveal in our new bi-annual European Real Estate Sector Report, not all sectors have been impacted in the same way as we highlight in the latest edition.
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While the ongoing disruption from the pandemic will put downward pressure on market fundamentals until the virus is no longer a threat, opportunities will likely emerge across the risk-return spectrum in advance of a recovery in demand and property income.
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Introduced in 2015, the Prologis Logistics Rent Index examines trends in net effective market rental growth in key logistics real estate markets in North America, Europe, Asia and Latin America. Our proprietary methodology focuses on taking rents, net of concessions, for logistics facilities. To create the index, Prologis Research combines the company’s local insights on market pricing dynamics with data from our global portfolio. Rental rates at the regional and global levels are weighted averages based on estimates of market revenue.
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Investors have sought to add real estate to their multi-asset portfolios due to the lower volatility, higher component of total return from income, diversification and tangible nature associated with real estate relative to other assets generally. Real estate is often seen as defensive in this regard. Exogenous shocks or Black Swan events, such as Covid-19, are by definition, ‘unknowable’ with respect to occurrence and consequence and therefore susceptible to the limitations of statistical models, a priori. This paper examines real estate investing, not just from whether it is defensive, but whether it has antifragility characteristics. Antifragility refers to an investment that is not only robust to exogenous shocks but benefits from such shocks. We show from first principles and from empirical data that real estate has antifragility and warrants higher allocations to multi-asset portfolios for
this reason.
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Real estate investor interest for European multifamily assets has been growing continuously in the last decade. In UBS's view, resilient income-driven performance, supported by strong occupier market fundamentals and long-term socio-demographic trends, will continue to fuel the rise of this asset class in the coming years.
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In this paper, UBS examines how office space will continue to add value to employees and employers after the current health situation has subsided. The post-COVID-19 future will be characterized by technological advances and organizations determining the right balance of remote work to advance their organizational priorities rather than one that sees a move toward an office-free world. Core and value-add office strategies which follow the three investment principles of purpose, accessibility and ESG, can provide good opportunities.
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Sustainable farmland practices play a vital role in reducing greenhouse gas emissions as well as conserving energy and water. It can also help to meet global demand for food, while encouraging sustainable practices benefiting the environment over the long-term. Investors, tenants, local operators and farm managers, should foster sustainability best practices, while respecting the land rights and the communities in which they operate for a greener and more sustainable future for us all.
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With e-commerce setting records during the 2020 holiday season and package deliveries forecast to grow by 80% over the next decade, a new study by the MIT Real Estate Innovation Lab reveals the tangible environmental benefits of online shopping.
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Prologis’ leading indicator of logistics real estate demand showed significant volatility in the second quarter.
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With e-commerce setting records during the 2020 holiday season and package deliveries forecast to grow by 80% over the next decade, a new study by the MIT Real Estate Innovation Lab reveals the tangible environmental benefits of online shopping.
Driven by the stay-at-home economy, online retailing surged and remained at peak levels throughout 2020. Early estimates suggest U.S. online sales grew by upwards of 50% (y/y) in 2020’s expanded holiday shopping season, with similar trajectories in other major e-commerce markets including China, Europe, Japan and elsewhere. Using average emissions results from the MIT study, the share shift to e-commerce resulted in approximately 2.4% fewer emissions per package.
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The growth of e-commerce over the past decade has demonstrated just how critical logistics real estate is to our customers’ revenue generation. Increasingly, logistics users must have the right location and the right building equipped with the right features in order to tap into the power of today’s evolving supply chain as a source of competitive advantage. Automation has the ability to unlock this potential in a big way. The logistics real estate sector has been facing shortages on two key fronts: a shortage of skilled labor and of well-located logistics space. Compounding this is the severe capacity crunch in last mile delivery -- shippers and parcel delivery companies cannot handle more packages and are turning away business. Increasingly, customers recognize that automation can help address these issues, and those that do not act now are getting left behind. In examining the tie between real estate and automation in customer operations, we identified four key takeaways.
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As we approach the end of 2020, the infrastructure sector looks to have weathered the COVID-19 crisis reasonably well. While certain sub-sectors were severely impacted, 1Q20 valuations for the sector were more resilient than other alternative asset classes and infrastructure companies saw fewer downgrades and defaults than their equivalent corporates. With a vaccine in sight, policy makers will continue to focus on how to support the economy in the interim, while fiscal stimulus looks like an attractive proposition. Government spending is likely to be directed towards supporting jobs while also investing in healthcare, decarbonization and digital infrastructure, potentially providing a boon for infrastructure investors.
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When we looked ahead to 2020, back in early December 2019, we have to confess that we did not even mention COVID-19, let alone foresee the massive impact that this new virus would have on the world. However, some of the predictions we made then have proved prescient. In our latest Top 10 real estate questions, we explore how the year developed and provide our predictions on real estate for 2021.
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Automation has the power to revolutionize logistics operations. As capabilities expand alongside declining costs, faster returns on investment (ROIs) are fueling adoption. Three trends are aligning to drive higher levels of automation within our facilities. First, COVID has led to greater absenteeism, further stressing labor availability. Second, technology continues to improve, expanding capabilities and reducing costs. Third, labor-intensive operations, specifically e-commerce, are growing quickly. These users benefit greatly from this technology and are leading adopters. This dramatic transformation cannot be overstated: What was expected to take years to gain traction is occurring in mere months. As a result, some logistics customers are making significant investments in automation. In this report, the first in a series, we examine the current state of warehouse automation, how it is changing, and impacts on desired building features.
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A widespread rise in virus cases threatens the economic recovery, though positive news on vaccine trials points to brighter prospects for 2021. Investment activity remains subdued and real estate capital value movements have varied by sector, showing small falls at the all property level in the third quarter. So far there is limited distress in the market, but we do expect some investment opportunities to be generated.
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Under a Biden presidency, the next wave of infrastructure investments will have greater emphasis on ESG issues. The extent of this will depend on the outcome of the Senate race, although historically, there is more bipartisan support for clean energy than headlines suggest. Private infrastructure funds, equipped with USD 200 billion of dry powder, will likely play an important role, especially given government budget constraints.
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September 2020 - The Central Valley is California’s fastest-growing and most-affordable region. The area’s economy is fueled by three large, recession-resistant economic sectors: government (including the nation’s second-largest government center, Sacramento), healthcare and agriculture. Based on projected future economic and population growth — as well as higher cap rates — the Central Valley is a classic example of a secondary market that is in the early stages of transitioning away from local and regional ownership to a larger base of institutional owners.
This report by Institutional Real Estate, Inc. titled California’s Central Valley: Land of affordability, growth and opportunity, looks at the opportunity in California’s Central Valley, where investors can tap into the region’s growth story and still find markets and properties that offer significantly higher risk-adjusted returns.
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August 2020 - The life sciences property sector has flourished during the past few years and that trend is expected to continue in the near term and well into the future. The sector’s positive property fundamentals have been fueled by record-setting life sciences industry capital infusions, creating growth and additional demand for office, R&D, lab space and other related facilities. Investors are increasingly recognizing the benefits — strong property-level fundamentals, portfolio diversification, value-add opportunities — of investing in life sciences properties in well-established and emerging clusters across the United States.
This report by Institutional Real Estate, Inc. titled Life Sciences: Expanding life sciences industry create opportunity for real estate investors, looks at the opportunity in the expanding life sciences sector, the increase in employment rates, investor opportunity in life sciences and more.
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Crisis precipitates change. COVID-19 has brought more than five years of evolution in the retail landscape into less than five months of time. Increased demand for high quality and infill logistics real estate is on the rise, stemming from the accelerated adoption of e-commerce and just-in-case inventory. In contrast, challenges have become more pronounced for retail real estate. Collectively, these changes have prompted retail owners to explore the opportunity to convert retail space for distribution uses. Prologis Research sized this trend to measure the potential implications for our industry.
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Economies have seen the sharpest contractions on record while massive central bank and government intervention has supported asset prices. In real estate the crisis has turbo-charged trends we were already seeing prior to the crisis, boosting logistics and hurting retail. We are now in the social-distancing phase, but investors need to think long-term and position themselves for once the pandemic has passed.
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This paper explores the impact of COVID-19 on both the industrial sector and European distribution networks. UBS leverages a variety of economic and high frequency indicators to see how the demand for logistics real estate may evolve in the coming years.
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The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets. Near-term indicators of performance have turned sharply downward, and the situation is fast-moving. At the same time, some lessons for what is to come can be drawn from past downturns, although causes and effects are, as always, different this time. Values are set to remain under pressure in the near term owing to stress in occupier and investment markets — and the range of possible outcomes is wide — but there are some reasons for optimism.
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The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets. Near-term indicators of performance have turned sharply downward, and the situation is fast-moving. At the same time, the Asia Pacific region is set to lead a global recovery, and while real estate occupier and investment markets are under near-term pressure, a significant opportunity set is expected to emerge.
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No property type is immune to uncertainty and financial impact. A great deal of uncertainty remains around the reopening and recovery of the US economy, a process that is likely to be extended over time rather than a quick rebound to pre-downturn economic levels.
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Deal flow has returned to most European markets, but heavily focused towards the core end of the risk spectrum. Pricing in this segment of the market appears to be holding up, but discounts expected as assets move up the risk curve. Historically low leverage levels should help prevent forced sales. But rising costs of new lending may stifle a recovery in activity and place outward pressure on yields.
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As we start the third decade of the 21st century, it is an opportune time to take stock of real estate markets around the world. Despite the aftershocks of the global financial crisis, most investors have taken advantage of real estate opportunities outside their home markets. At AEW we have been working with international investors for nearly 40 years. In this report, we share our perspective on global investment markets, considering both global trends and occupier market trends.
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Limited current and future supply levels will limit the decline in prime office rents in the short term. But the economic challenges are likely to lead to headcount reductions, with corporates vacating unutilized space. This trend could be accelerated, if as we expect, corporates adopt higher levels of flexible working in a post COVID-19 world.
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UBS believes it is too early to write the epitaph for the entire office sector as there are a number of counterbalancing forces at work. However, the realities are that landlords, companies and tenants alike will all be forced to improvise, adapt and overcome a number of challenges in the post COVID-19 world.
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Disruption to office occupiers is not as significant as other sectors. But a protracted downturn will hurt revenue streams and lead to a spike in defaults. Serviced office providers are, however, facing very immediate impacts to their cash flows. Will they be able to survive long enough to benefit from any structural shifts longer term?
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It's an election year. Economic growth lost some steam. Interest rates remain low. Our US Real Estate Outlook 2020 outlines where we see solid fundamentals and uncovers pockets of uncertainty. Find out what we expect for the four property sectors in the new year, including strategic themes to guide investment decisions in private real estate.
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Invesco Real Estate presents, "Considerations for investing in global real estate."
Many investors are familiar with the appeal of holding real estate. With
a generally low correlation to other asset classes, it can serve as an
instant diversifier in a mixed-asset portfolio. Historically, real estate has
delivered strong relative performance across multiple cycles compared
to other asset classes, and its characteristic stable income, underpinned
by long-term leases, makes it a compelling alternative to traditional
fixed-income instruments. Participation in real estate from the investor
community is one of the highest among the various alternatives asset
classes, and is expected to grow in importance in portfolio allocations
moving forward.
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The AEW European Research & Strategy team are pleased to present our September 2019 quarterly research report, “European Real Estate Debt”, where the European Research & Strategy team takes a closer look at all-in interest rates and loan margins available to investors, as based on our new granular loan-by-loan database. The results of our new commercial real estate interest rate model and its key drivers are being discussed. The lender perspective is also considered by looking at historical loan defaults and losses to ensure that current margins are sufficient to cover these.
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The AEW European Research & Strategy team are pleased to present our June 2019 quarterly research report, “Factor Investing 2019”, where the European Research & Strategy team have applied Factor Investing to nearly 40 European office markets. Factor Investing identifies multiple factors that drive excess returns compared to any market portfolio. This so-called smart beta strategy uses factors such as volatility, liquidity, quality, value, yield and growth. Finally, we compare factor investing to the traditional core and value add investment styles.
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The AEW European Research & Strategy team are pleased to present our March 2019 quarterly research report, ‘AEW’s Peripheral Property Perspective’, looking at how cross-asset investors can evaluate real estate private equity and debt compared to their listed bond and equity allocations.
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The AEW European Research & Strategy team are pleased to present the 2019 European Annual Outlook. In this forward looking report, we present our outlook for the European commercial real estate markets for 2019 and beyond. As many European markets move into the later stages of the cycle, we launch our new risk-adjusted return approach to help meet the increasing challenges investors will face.
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January 2019 — After 10 years of relatively unabated economic strength, the region looks to be stuttering. However the softer economic environment does not come as a surprise; mid last year we flagged a potentially slower growth trajectory for the Asia Pacific region in the latter half of 2018. Among the reasons we cited trade tensions exacerbating weakness in China’s economic slowdown, tighter financing conditions from rising global interest rates, and the related pass-through into weaker domestic demand. However, it is the depth and breadth of the potential slowdown that should currently worry global institutional investors. To be sure, regional growth has slowed in the past few months, but the outlook remains cloudy at best if recent equity market performance is any guide.
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November 2018 — We believe MiMis, or millennials and middle income households, will continue to drive demand for U.S. apartments in the coming decade. We define middle income households as those earning between 80% and 120% of area median income which is typically those earning between $45,000 and $75,000 per annum. These households comprise between 20% and 35% of each age cohort. Middle income households often have to rent out of necessity which creates consistent demand for apartments targeting middle income renters. Millennials are the largest generation on record and like the Baby Boomers before them, they will reshape the economy and many industries as they heavily consume goods and services, including housing. Millennials compose 35% of the workforce and their contribution to the U.S. economy continues to grow. In this analysis, we define the millennial generation as those born between 1981 and 1998. Furthermore, we divide the millennials into older millennials (OMs) and younger millennials (YMs) cohorts.
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March 2018 — CenterSquare’s REIT Cap Rate Perspective presents the market pricing of $1.5 trillion of real estate in the U.S. REIT market, seeking to quantify the valuation gap between public and private markets. While at times the disparity may be temporary or driven by short term volatility, the forward discounting inherent in public markets can also offer investors insights as to the possible future direction of real estate values. In this report, CenterSquare shares their proprietary REIT implied cap rate results at the sector and geographical level on a quarterly basis.
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October 2017 — Real estate investors should consider the following trends and potential value they can bring to their investments in the year ahead: current REIT valuations are increasingly being impacted by investor activism, there is substantial capital flow from non-VC investors, robotic process automation can help CRE companies bring down costs drastically and may end up being cheaper than offshoring.
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February 2017 — The world in 2017 has much to offer, but it will require real estate professionals to be more informed than they have ever been. As well as comprehensive macroeconomics and real estate coverage, CBRE offers five key research themes:
Capital markets: the search for alternatives
Office: new work styles, new locations
Retail: changing technology
Industrial: transformation of the supply chain
Hotel: new experiences, new platforms
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January 2017 — Despite significant global economic and political uncertainty, the steady U.S. economy — aided by stimulative fiscal policy — could see stronger growth in 2017, supporting attractive returns for real estate investors.
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December 2016 — PGIM identifies nine major occupier and investment trends that are expected to influence market conditions and investment performance in 2017 and beyond. Uncertainty is higher than it was 12 months ago — forthcoming elections in major European countries carry a renewed significance in light of recent results — but the economic backdrop remains broadly supportive. Sentiment is holding up, and the global growth outlook is steady going into 2017.
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October 2016 — Infrastructure assets have provided the critical underlying structure to societies for centuries. However, as a distinct investment category infrastructure only really emerged from the beginning of 2009 onwards - just after the Global Financial Crisis.
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Q2/2016 — In the post Global Financial Crisis investment world, a distinct asset class called “Real Assets” has emerged, primarily motivated by the desire of investors to increase diversification and income while reducing volatility. In the current low yield, low growth investment environment, we recommend a more defined focus on “Income Producing Real Assets” (IPRA) in an effort to meet these objectives. Download the report to continue reading.
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March 2016 — Cloud-based software applications, smartphones and other mobile devices have unplugged and revolutionized the modern-day workforce. This is having a profound effect on office owners, occupiers and employers, and will challenge the existing paradigms that platform the entire commercial office real estate industry for years to come.
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March 2016 — Since the development of commercial aviation during the post-World War II era, passenger volumes at major commercial airports has grown at multiples of GDP over any medium-term period. This growth reflects many underlying factors including increasing wealth, real reductions in the cost of air travel, developments in aircraft technology and improvements in international airspace regulation. Download report to read more.
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March 2016 — The 2016 outlook for Europe remains one of gradual recovery. However, unlike previous years, Europe seems to be on a firmer footing relative to other parts of the globe. Although the continent has not been immune to recent global uncertainty, consumers and businesses have so far seemed undeterred, leading to an acceleration of GDP growth in 2015. Download the report to read more.
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February 2016 — This paper discusses the relative merits of private versus public infrastructure investment.
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2016 — Infrastructure Partnerships Australia (IPA) and Perpetual Corporate Trust have again undertaken this study of the Australian market for infrastructure projects and are delighted to jointly publish the Australian Infrastructure Investment Report.
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Q4/2015 — 10 years is a magical number in the real estate business. Many investors analyze their returns over a hypothetical 10‐year hold, most standing loans on commercial real estate have a 10‐year term, and most closed‐end funds have a 10‐year life. Many commercial leases have 10‐year base terms. At the end of the 10‐year cycle, portfolios are culled and rationalized, loans are refinanced, funds are liquidated, and a whole new crop of tenant improvements and capital expenditures is needed to attract or retain tenants. Download the report to continue reading the most recent quarterly PCCP White Paper.
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September, 2015 — This paper delivers Aberdeen’s current research into the European residential sector at a country level. Specifically, we examine the rented, institutionally-owned residential sector. We believe that supply is constrained across Europe and on-going capacity constraints are commonplace. Development has simply not kept pace with demand. In our opinion, the most attractive market for residential real estate is Germany; however, other markets look promising as well. There are significant investment opportunities in the Netherlands, Sweden, Switzerland, Denmark, France and increasingly the U.K. Read our paper to learn more about how residential markets can differ enormously between countries and cities.
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August, 2015 — Real estate performance across much of the Asia Pacific region has been steadily attractive on the back of a strong capital market and healthy recovering leasing market. Japan, China, Hong Kong and Singapore experienced strong office leasing demand in the first half of 2015, while Australia and Korea witnessed short-term challenges due to a weakened economy. Recovery is expected in 2016 for key most markets while it is likely to remain subdued in Singapore due to a surge of new supply. Download the report to read more.
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August, 2015 — The U.S. commercial real estate market has delivered impressive total returns over the past five years. So impressive, in fact, that some investors are beginning to wonder how much longer the momentum can run. This cycle, like all others, will eventually come to an end. Yet real estate has historically performed well in moderate-growth, low interest rate environments, conditions that we expect to persist for several more years. Download the report to read more.
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August, 2015 — Europe’s economic recovery remains on track. Although not without risks, with ongoing concerns in places such as Greece and Ukraine, on the whole the outlook for the European economy has improved over the past six months. Confidence is high and jobs are being created. With the ECB undertaking quantitative easing, bond yields are lower than had been previously expected, while the threat of Eurozone bond yields trending considerably higher over the coming years is small. Download the report to read more.
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June, 2015 — One primary consideration of investors looking to make an allocation to listed real estate via real estate investment trusts (REITs) today is the impact that a rising-rate environment has on the relative performance of REITs vs. other broader asset classes. The purpose of this paper is to discuss how REITs have historically performed in different interest-rate environments, where we are today, and what we can expect going forward. We will also discuss the role of REITs in a portfolio as part of a comprehensive investment strategy.
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Q2/2015 — The eponymous movie starring Tom Hanks was released in 1989 at the onset of a massive population shift away from the urban core of American cities and into the suburbs. In the years that have passed since the Great Recession, however, America’s inner cities have led the way in the recovery, leading many to the conclusion that we have entered into a new paradigm of re‐urbanization. As it relates to commercial real estate, the thought is that a shift in population growth away from the American suburb will have a profoundly negative impact on suburban office as employers follow their workforce back into the CBD. Our instincts tell us that the “death of the American suburb” drum beat proliferated in the media is misguided and overplayed, a recipe for a good investment opportunity. In the end, success in real estate investing all boils down to supply and demand. Let’s take a step back and look at the macro forces at work.
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Spring, 2015 - The apparent predictability of the development cycle begs the question that if we can see projects rising before our eyes, and we can measure their progress along the way, and we can predict with a high degree of certainty when they will arrive, then why do so many people continue to claim that you cannot time the real estate market? The market cannot hide the supply pipeline that it is delivering from a distance, as the data and the physical evidence are available to most anyone who takes the time to observe them. The reality is that you can time the cyclicality of the real estate market, and, more importantly, to be a superior investor, you actually must time the market. More on that idea to follow, but first let’s set the stage...
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March, 2015 — The world is becoming increasingly urbanized, with a rising number of “megacities” that are experiencing rapid growth in both population and affluence in both the developed world and emerging markets. The world’s gateway cities are very appealing to property investors and appear to be a magnet for international capital. While there are common, shared characteristics across the world’s gateway cities there are also pronounced differences, particularly in the key variable of supply constraint (or lack of it).
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2015 — This report, put together by Prudential Investment Management (PIM), examines why right now is the primetime of urbanization, and explores the investment opportunities currently available in emerging markets due to the growth of cities, including urban infrastructure, real estate, technology, anti-pollution initiatives, and more.
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2015 — With the ambitious target of implementing the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) by 2015, the opportunities for corporate occupiers and real estate investors across an enlarged single market of some 600 million people look promising. Nicholas Holt examines the background, the challenges and the possible impacts. Nearly five years on from the signing of the AEC blueprint in November 2007, the region is now only three years away from the target of fully implementing measures to create a single market with free movement of goods, services, foreign direct investment and skilled labour.
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Q3/2014 — We're continuing our exploration of supply and demand this quarter, but this time we are taking a look at condominiums, which was the last one sector of real estate that had substantial new development and unsold inventory during the last cycle. Today, almost six years later, much of the inventory ha been absorbed - largely at lower prices - or converted to rental units.
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June, 2014 — The U.S. economy temporarily contracted in the first quarter, impacted by sever winter weather. Real GDP declined at an annualized rate of 1.0% (second estimate) in Q1 2014, dragged down by declines in private investment and net exports. On the positive side, consumption expanded to a 3% annualized rate and real GDP was up 2% on year-over-year basis. Second quarter economic release portray a resilient and strengthening economy, albeit one that still face challenges (housing and long-term unemployment), that we expect to grow at 3% or above the rest of the year. Job growth is picking up, household wealth is rising, and policy uncertainity has essentially vanished from the news headlines.
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Q2/2014 — This quarter we're focusing on basic rules of economics: specifically, supply and demand. It is commonly understood that the Global Financial Crisis was not a real estate driven recession powered by commercial oversupply, like the early 1990s recession. Rather, it was caused by residential real estate over-pricing, largely driven by over-heated financial markets.
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April, 2014 — Real estate investment trusts (REITs) are relatively young asset class in Asia. The earliest markets to embrace the asset class were Japan and Singapore, both of which saw their first REIT initial public offering (IPOs) just a little over a decade ago. Since then, REIT markets have emerged in Hong Kong, Malaysia, Thailand, Taiwan, and South Korea, with additional markets such as India and the Philippines introducing REIT legislation or considering doing so.
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Spring, 2014 — Australian and Canadian pension funds have been pioneers in infrastructure investing since the early 1990s. They also currently have the world’s highest asset allocation to infrastructure. The article compares and contrasts the experience of institutional investors in the two countries, looking at factors such as infrastructure policies, the pension system, investment strategies, and the governance of pension funds.
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March, 2014 — This study discusses the role of institutional investors in financing infrastructure in emerging market and developing economies (EMDEs). It analyzes the present level of involvement as well as the future investment potential of new financing sources such as public and private pension funds, insurance companies, and sovereign wealth funds. Current investment volumes are still low, but interesting, practical examples can be found in a range of countries and projects. International and domestic investors apply a variety of investment approaches in developing countries, using different equity, debt and fund instruments.
This overview can yield some lessons for policy makers and investors. There are (more or less) favorable pre-conditions for successful private-investor involvement, and different models work in different situations, depending on the development stage and the institutional environment. Four types of "leadership models" are therefore described for international and/or domestic investors seeking to spearhead infrastructure investment in EMDEs.
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Q1/2014 — It's year end, time for the traditional look back at the accomplishments of the year just concluded, and for a look forward at the opportunities to come. The U.S. stock markets are at record highs, despite hints that the Federal Reserve is starting to back off on its quantitative easing strategy. The Wall Street Journal reports that in numerous markets, housing prices are past prior peaks (although the numbers are uneven).1 The U.S. Treasury is reflecting increased confidence in the economy, passing the 3.0% rate for the first time since 2011.
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January, 2014 — Growing up in Canada, hockey was consistently a big part of my life (and still is). With the winter Olympics coming, 2014 is a big year in the hockey realm as twelve nations will compete for a gold medal in Sochi, Russia. In hockey, there are many ingredients: stick, skates, pads, ice, net, but none more important than the puck. The puck is a frozen disc of vulcanized rubber that every player is chasing, passing, shooting, defending and anticipating its next location. In fact, in the 1990s, Fox Television devised a system which had internal electronics allowing television viewers to track the position of the puck with a blue glow on the screen. Its purpose was to aid viewers to better follow and understand the action of the game.
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2014 — Within our new organisation, a unified investment strategy has been formulated using top-down analysis to identify the geography and cycle timing of prospective property investments. Targeting countries is the first layer of investment strategy, as country-level factors are a primary driver of property performance. These factors include both long-horizon elements of economic and demographic structure that contribute to the attractiveness of real estate investing, as well as shorter-term dynamics of real estate cycles and their drivers that detemine risk-adjusted pricing. This report offers a description of our top-down process and its conclusions for 2014. Bottom-up analysis dealing with individual sector, sub-markets and specific properties draws from the experience and expertise of our real estate professionals across disciplines. This complements top-down analysis and it an integral component of executing strategy.
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November, 2013 — This white paper focuses on the potential of value-add strategies to generate attractive risk-adjusted returns in private real estate. Value-add strategies involve acquiring real estate at an attractive cost basis and then resolving the property’s deficiency, stabilizing the income stream, and increasing the overall value of the property for disposition.
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Q3/2013 — The U.S. economy appears to have recovered from the financial crisis. Equity markets reached record highs during the second quarter, with the Dow reaching its peak on May 28th at 15,409, an 18% increase from the beginning of the year. Fears of a double-dip recession have subsided behind 2.2% real GDP growth in 2012 and 2.5% projected GDP growth in 20131. With the continued growth of the economy, the Fed indicated that they may begin scaling back their monthly securities buying program. Despite the recent pull back in the markets, most indices are still very much in the positive for the year and the underlying macro-economic statistics are very positive year to date.
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2013 — Investor sentiment across many markets in Asia has grown increasingly uncertain toward the end of 2012, with concern over fading global economic prospects tempered by ongoing strength in asset pricing and persistently compressed yields. The lack of conviction has been highlighted by the divergent approaches of foreign and local investors to property pricing, with Asian buyers often willing to pay up for properties at rates foreigners find prohibitive.
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Global or local?
2013 — Property has long been considered a mainstream asset class for institutional investors. However, for most there has been a strong home-bias, with high exposure to domestic markets. Increasingly, we believe investors are looking toward global property markets as a way to improve potential risk-adjusted returns and divof their property portfolio. The step from domestic to global property investment, however, is not a trivial one and in some cases it may not be an appropriate solution. We believe the following three steps provide some insights into global property markets and also a framework for investors to understand better whether it might be a suitable approach for them.
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2Q/2013 — The 2008 financial crisis may forever be associated with one word: leverage. Homeowners (no money down mortgages), investment banks (30 to 1 leverage) and governments ($1 trillion deficits) took on too much debt, and the resulting correction has been painful.
Now, it seems that leverage is returning to commercial real estate, presenting new opportunities and a new set of risks. Leverage has grown more complex, and before making an investment, investors need to consider how leverage will impact investments in different parts of the cycle. Skillful management of leverage will be critical for investors to achieve required returns and survive any potential market correction.
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March, 2013 — Defining the Objectives and Characteristics of a Real Assets Framework
In our view, the design of a real assets investment strategy is not just about inflation protection; it’s also about delivering attractive long-term returns with less volatility than found in most individual real asset classes. When inflation is rising, the strategy’s return potential should rise as well. When inflation is easing, its diversified return profile should be less volatile than those of individual real asset classes. And finally, the strategy should offer diversification(1) benefits for portfolios of stocks and bonds. As we applied these objectives to the design of a real assets framework, we identified five central themes.
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March, 2013 — Investment in infrastructure is among the world’s leading growth drivers and is a strategic priority for countries worldwide. Listed infrastructure companies are playing a dominant role in the accelerating growth of the infrastructure asset class globally. More than $50 trillion is likely needed to fund global infrastructure projects in the coming years, essentially making infrastructure among the world’s largest growth industries.
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March, 2013 — Real estate securities combine the benefits of owning commercial real estate with the features of publicly traded stocks. This unique combination results in a set of investment characteristics that we believe make a compelling case for a long-term strategic allocation to the asset class.
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2013 — The key finding of this year’s report into global construction disputes is that disputes are taking longer to resolve. Overall, they are now taking over a year to resolve, with the average length of time for a dispute to last in 2012 being 12.8 months, compared to 10.6 months in 2011. This continues the trends for longer disputes - in 2010 disputes were taking 9.1 months to resolve. Whilst dispute durations are getting longer, the value of disputes was broadly stable in 2012. The average value of global construction disputes in 2012 was US$31.7 million, down slightly from US$32.2 million in 2011.
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2013 — Over the last 12 to 18 months, there has been a noticeable increase in interest from US investors for opportunistic real estate investment in Europe. At Peakside Capital, we attribute this change to both "pull" and "push" factors. The "pull" is the realization in the US that the worst of the Eurozone crisis is behind us and parts of Europe are actually doing quite well. The "push" is the realization that the opportunities arising from the financial crisis in the US are now largely exhausted and so investors are looking further afield, with Europe being the next target. In other words, US-based investors now view Europe more as an "opportunity" than a "risk".
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2012 — The market for real estate secondary transactions has recorded a fourth straight year of record transaction volume, with $2.6 billion of activity during 2012, based on Landmark Partners’ annual global tally. A tenured investor in the real estate secondary market, Landmark continues to aggregate this data through a variety of channels including the firm’s own transaction experience as well as discussions with other market participants.
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2013 — The Singapore Family Offices report is a short report on what really makes Singapore such a unique location for family office and fund management activities.
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2013 — This report is a primer on raising capital from family offices.
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2013 — KPMG and Mergers & Acquisitions magazine conducted a survey of over 300 M&A professionals at U.S. corporations, PE firms, and investment funds immediately after the U.S. election to gain a better understanding of the current M&A market. This publication analyzes the findings of the survey and provides insights into the outlook for M&A in 2013.
For additional news and information, please access KMPG LLP's Web site on the Internet at http://www.us.kpmg.com
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2013 — Optimism has returned to Europe’s real estate industry. Sentiment among industry leaders about the prospects for their businesses is more positive than at any time since 2008, despite the uncertain macroeconomic outlook. Equity for investment in prime commercial real estate is expected to increase, but bank debt is predicted to contract further. Emerging Trends Europe’s respondents are adjusting to this “new normal.” Those with access to capital are focusing on opportunities in areas they know best. They recognize that traditional stock selection and micro asset management skills are crucial to generating returns. The environment offers very little certainty and definitely no quick wins. Europe’s real estate markets continue to be challenging, but all sectors offer new investment potential, too.
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February, 2013 — Commercial real estate lending markets finished 2012 on a high note, with a flurry of deals closing during the fourth quarter. According to CBRE's analysis of loan closings, total lending volume increased by 18% in Q4 2012 over year-earlier levels. In addition to strong growth in multifamily lending from the agencies (up 36% from 2011 levels), banks and CMBS lenders contributed disproportionately to the overall gains.
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Q1/2013 — As we enter 2013, we are more than four years into the Global Financial Crisis. As stated in prior commentaries, PCCP believes we are only 40% of the way through the real estate workout cycle. Our view is consistent with the most prominent recent academic literature, which argues that leverage-induced recessions run 7-9 years (This Time is Different by Reinhart and Rogoff). Anecdotally, it feels like strong financial institutions are starting to invest in earning assets, which in our world means making new loans on commercial real estate (“CRE”). Real estate was hit especially hard and the recovery has been a story of “haves” and “have nots” as we all know. The “haves” are the best customers, with strong balance sheets and trophy real estate, or anyone with a Class A apartment project. The “have nots” are everyone else. But what do the numbers show? We analyzed data on the CRE debt world as a whole and the three largest banks holding CRE debt to see how our anecdotal observations match up against the statistics. We conclude that although CRE lending is showing signs of life for the “haves,” there will still be plenty of opportunity to lend on and invest in the “have nots,” specifically institutional-quality, non-core asset recapitalizations.
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October, 2012 — The fundamental case for infrastructure is grounded in the return potential and inherent characteristics of the asset class—long-lived assets in businesses with high barriers to entry found in monopolistic industries, typically supported by the resilient demand for essential services. The investment opportunities are global, driven by decades of infrastructure neglect in developed economies and the need to build out large scale infrastructure networks in emerging markets.
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September, 2012 — The phrase “fiscal cliff” was coined by Ben Bernanke, Chairmen of the Federal Reserve, in describing the impact of budget sequestration and tax increases on the U.S. economy, effectively causing a new recession to occur. The Congressional Budget Offi ce (CBO) agrees. They estimate that the new policies will cause real GDP to contract by 0.3% in 2013. However, the CBO acknowledges the possibility of avoiding the cliff if policymakers adopt alternative solutions. In this paper, we review the various scenarios and evaluate the impact each scenario would likely have on the commercial real estate (CRE) markets.
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Q3/2012 — IPD Announces 3Q, 2012 Results of the Giliberto-Levy Commercial Mortgage Performance Index. The Index, which tracks private market loans held in investor portfolios, produced a 1.15% total return in 3Q, 2012.
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Q3/2012 — U.S. investment returns exhibit consistent growth. The IPD U.S. Quarterly Property Index, which includes tax-exempt and taxable domestic and foreign investors invested in U.S. private equity commercial real estate, produced a total return of 2.5% in 3Q 2012, consisting of 1.4% income and 1.2% appreciation.
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September, 2012 — Recent quarters have shown measured improvement in the United States economy. The current situation, however, contains uncertainty and investors must proceed with what leading economists refer to as “tempered optimism.”1 Allowing this mindset to guide decision‐making creates a “flight to quality,” leading investors to pursue expensive Class A assets and core assets (such as trophy office towers and multi‐family complexes in gateway markets New York City, Boston, Washington D.C., San Francisco and Los Angeles) purchased on historically low cap rates. These premium priced trophy assets attract investors who are looking to allocate equity to perceived stable products, due to an appetite for current yield driven by the record low U.S Treasury bond rates.
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September, 2012 — This report on Chinese real estate markets is designed to serve as a reference chart book to help investors systematically review the key data and indicators illuminating the latest changes, trends and themes in the markets. The information is organized in a way that brings together macro- economic, capital markets and sector specific direct market perspectives
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August, 2012 — Global economic activity expanded at a measured pace in the first half of 2012. Leading indicators point to a continued deceleration for most major economies. The private sector recovery remains modest in many countries amidst weak sentiment. As the unresolved Eurozone debt crisis looms over the global economy, the path ahead is fraught with uncertainties and risks. However, not all is gloom and doom. While economic prospects for the U.S. and Europe remain muted, Asia will continue to stand out given resilient domestic demand and greater policy options.
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Q2/2012 — KPMG LLP, the audit, tax and advisory firm, surveyed top-level executives in the commercial real estate industry during the second quarter of 2012. Participants were asked about business conditions in their sector, the most significant revenue growth areas, and factors that would impede or support recovery in real estate. These responses were compared to the findings of a similar survey conducted among commercial real estate executives in the second quarter of 2011. For additional news and information, please access KPMG LLP's Web site
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2012 — The past few years have certainly been a testing time for all investors active in the European real estate market. Sovereigns have been on the brink of collapse, economies show little sign of anything remotely approaching a sustained recovery, and the banking system will remain fragile for some considerable time yet. This period of unprecedented volatility has, at times, challenged the very core of the European experiment. Twenty something crisis meetings have come and gone and each has done little to calm the nerves of fractious investors, much less engender any feeling of confidence.
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2012 — This report is a guide to assist single and multi-family offices in identifying top fund managers.
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September, 2011 — On September 12, 2011, the Investment Committee of the California Public Employees' Retirement System ("CalPERS") Board of Administration ("Investment Committee") earmarked up to $800 million for investment in California infrastructure over a three-year time period. The primary goal of this initiative is to make investments in essential infrastructure assets that meet the risk-return objectives of CalPERS Infrastructure Program ("the Program"), while also potentially benefiting local economic development and essential community services across the state. The Investment Committee instructed staff to develop a plan for outreach to state and local governments to explore the role CalPERS and other pension systems can play in facilitating infrastructure investment in California ("the Outreach Effort").
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