By Thomas Duffell
Non-listed real estate funds have been knocked off the top spot for investors’ real estate vehicle of choice, according to a survey published by INREV, ANREV and PREA.
Joint ventures and club deals ranked first in a poll of the preferred access routes to property conducted by non-listed real estate’s three trade bodies.
According to the Investment Intentions Survey 2016, published on Tuesday by INREV, ANREV and PREA, non-listed real estate funds took second place with direct investments in third as real estate investors’ vehicle of choice.
In 2015, the preferred route to market was non-listed real estate funds, with joint ventures and club deals being ranked second and direct investments third.
Nearly two thirds (64.1 percent) of investors expected their allocations to joint ventures and club deals to increase in the 2016 survey. Meanwhile, 46.7 percent of investors expected to increase their allocations to funds and 43 percent of investors aimed to do more direct investments.
However, on a weighted basis, the picture indicates that larger investors are likely to decrease their allocations to non-listed real estate funds significantly more than smaller investors and that they will do so in favour of joint ventures, club deals and direct investments, Henri Vuong, INREV’s director of research and market information, said at the unveiling of the survey results on Tuesday.
Also speaking at the event was Rob Wilkinson, chief executive of Paris-based real estate investment manager AEW Europe, who was “surprised” to see funds knocked off the top spot. He added that “most of us had experienced funds as a more favoured route.”
The survey also revealed that in 2016 investors’ preferred investment strategy is value-add. The shift towards value-add plays is coming at the expense of both core and opportunistic styles, though more from opportunistic, said Vuong.
In 2015, investors indicated their preferences to be evenly split between core and value-add (41.1 percent each) and opportunistic (17.8 percent). In the 2016 survey, the corresponding numbers were core (39.4 percent), value-add (46.8 percent) and opportunistic (13.8 percent).
“There are interesting signals in this survey, many of which reflect general questions about what stage of the cycle we are in,” said Vuong. “To a certain extent, the intentions expressed in these results feel strangely familiar – and we could be forgiven for identifying patterns that resemble the situation in 2007.”
“However, market composition is very different today and the focus seems much more tilted toward longterm income with the stability that that implies.”