Investors will increase their allocation to non-listed real estate funds this year in spite of the turmoil in credit markets, according to the latest INREV Investment Intentions report.
Investors will increase their allocation to non-listed real estate funds this year in spite of the turmoil in credit markets, according to the latest INREV Investment Intentions report.
Based on 112 company responses from investors, fund managers and fund of funds managers the survey reports 82% of investors expecting to increase their allocation to the non-listed sector in 2008 while the remaining 18% of investors’ allocations will remain unchanged. Georg Allendorf, managing director at RREEF and vice chairman of INREV’s Management Board, attributes the continued sector commitment to a long-tern view which will overcome any short-term effects of the credit crisis.
The influence of current conditions can be seen, however, in the respondents’ emphasis on corporate governance and market transparency. Respondents are placing greater priority this year on manager quality and out-performance with the expectation that closer attention will be paid to the performance record of fund managers, said Allendorf. According to Andrea Carpenter, director of research and market information at INREV, another effect is the increased importance being placed on the fund managers’ local presence, with current conditions requiring greater local market understanding.
Allendorf cited INREV's effort to increase transparency and market information, which respondents considered as improving. The preferred investment location for 2008 was France in preference to Germany, although fund managers and fund of funds managers selected Germany, which was last years favourite among all three groups. Capital allocations to non-European investment vehicles are expected to increase, with Japan, China and the US playing a leading role and some respondents indicating an interest in Mexico and Brazil.