Investors love real estate funds – for now

Survey finds joy over returns, concern over valuations

TRD New York /
Sep.September 04, 2015 04:50 PM

Real estate investors are much happier with their returns than in past years but are also anxious over valuations, according to a new survey by research firm Preqin.

In the survey, conducted among investors in private real estate funds, 90 percent of respondents said returns met or exceeded their expectations. A mere 9 percent said they were disappointed, down from 18 percent in December 2013 and 47 percent in December 2012.

At the same time, a significant share of respondents indicated concerns that prices are getting too high amid fierce competition for properties. When asked what their key concerns are, 63 percent pointed to valuations, followed by deal flow (37 percent) and performance (30 percent).

These worries may help explain why most investors aren’t exactly scrambling to throw more cash at fund managers. 26 percent of respondents said they are looking to increase their exposure to real estate funds, but 22 percent are planning to reduce it.

Still, Preqin’s head of real estate asset products Andrew Moylan has a positive takeaway. “Despite high levels of dry powder, and concerns among investors about valuations and the potential impact on future performance, many are planning to commit significant amounts of capital to real estate,” he wrote.

Private real estate funds racked up stellar returns in recent years, which made them attractive to investors wary of low bond yields. No one has been more successful at raising capital than Blackstone, which recently raked in $15.8 billion for its latest global real estate fund.


Related Articles

arrow_forward_ios
From left: Joe Biden, Starwood Capital's Barry Sternlicht, Blackstone's Stephen Schwarzman and Donald Trump (Getty; iStock)

Where real estate’s investment giants stand on Biden vs. Trump

Where real estate’s investment giants stand on Biden vs. Trump
Stuyvesant Town (Getty)

Layoffs at Blackstone’s Stuy Town management firm

Layoffs at Blackstone’s Stuy Town management firm
Brookfield’s Bruce Flatt and Blackstone’s Jonathan Gray

Blackstone and Brookfield are going mall shopping in India

Blackstone and Brookfield are going mall shopping in India
Blackstone's Jonathan Gray and a rendering of 350 Park (Vornado, Blackstone)

Blackstone eyes new 1M sf NYC headquarters

Blackstone eyes new 1M sf NYC headquarters
Blackstone Group president Jonathan Gray (Getty)

The future according to Blackstone: “Less density and a lot less new construction”

The future according to Blackstone: “Less density and a lot less new construction”
Blackstone's Jonathan Gray (iStock, Getty)

Blackstone says goodbye to CMBS fund

Blackstone says goodbye to CMBS fund
Blackstone COO Jonathan Gray and Club Quarters Chicago at 111 W Adams Street (Getty, Google)

Blackstone misses payment on $274M hotel loan

Blackstone misses payment on $274M hotel loan
Blackstone’s Jonathan Gray

TRD Insights: Here’s how much tenants pay for space at Blackstone’s massive industrial portfolio

TRD Insights: Here’s how much tenants pay for space at Blackstone’s massive industrial portfolio
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...