PERE Investor Perspectives Survey

Recovery was the priority in 2021, as the industry navigated its way through pandemic conditions to find continued success in uncertain times. The ‘new normal’ has caused many to reassess their investment choices and has changed the desirability of different assets.

The 2021 Perspectives study reveals private capital displaying cautious sentiments toward real estate – 15 percent plan to invest less in 2021, up from 9 percent reporting the same in the 2020 study. And hearts and minds are shifting away from office and retail – a mere 2 percent and 4 percent say they will commit more to these sectors respectively. Investors’ view of logistics, residential and healthcare is more robust.

Against the covid-19 backdrop, which has caused much pondering over whether new-found virtual habits are here to stay and what long-term impact this might have on assets like offices and shops, these findings are not altogether surprising. But let’s not be too downbeat. Despite current uncertainties, most institutions polled want to hold allocations steady in the months ahead. And with only 8 percent reporting overallocation to the sector, and 34 percent under allocation, there is no shortage of dry powder still seeking a home in property.

While fundraising figures might suggest investors have lost faith in private real estate in the last 12 months – $135 billion was raised in 2019, the second lowest figure recorded in seven years, and just 181 funds closed, down from 337 in 2017 – the findings of our Investor Perspectives 2020 survey indicate that institutional interest in the asset class is very far from down and out.

Just 10 percent of investors polled report they are overallocated to the asset class going into 2020, with 32 percent saying they are underallocated. Further, 35 percent of respondents are looking to commit more capital this year. Only 9 percent say they will invest less. Investors are also largely content with the performance of their investments with 56 percent saying the asset class either met or exceeded benchmarks in 2019 – only 7 percent feel they were short changed. Happily, private real estate is expected to deliver in 2020 too, with 65 percent of investor respondents foreseeing benchmarks being met or exceeded. Just 15 percent anticipate performance will fall short.

So, despite a quieter fundraising year in 2019, it would be premature to press the panic button. Private capital is out there and eager to take up residence in property in the months ahead.

Find out how institutional investors intend to approach real estate in the year ahead, the issues that most concern them, what they think about the fees managers charge them, and what they focus on in due diligence… and much more. This PERE survey offers up plenty of food for thought whether you are a manager or investor.