A record EUR8.9 billion of new capital was raised for non-listed real estate debt funds in 2013, according to the latest Capital Raising Survey from INREV.
The results demonstrate the increasing importance of debt in the European real estate market. European investors have been the most active, investing almost three quarters of the total capital.
By country strategy, the UK alone was responsible for more than EUR2 billion of new capital.
The total raised for joint ventures and club deals was EUR3.5 billion.
INREV’s survey of 147 fund managers found that the non-listed real estate industry raised a total of EUR47.3 billion of capital last year. The greatest share of this – EUR18.1 billion – was allocated to non-listed funds, the highest amount raised since 2007 and 77 per cent higher than the average raised between 2008 and 2012. European capital accounted for less than half (47.3 per cent) of this. Their share in joint ventures also fell significantly, from 82 per cent in 2012 to 57.7 per cent in 2013.
North American and Asian investors have both increased their market shares significantly, driven by their appetite for opportunity and value added products. More than a third (35.7 per cent) of the capital committed to non-listed funds in 2013 originated in North America, with a further 16.6 per cent coming from Asia.
Pension funds continue to be largest source of capital for non-listed funds (55.8 per cent) and separate accounts (48.4 per cent), while sovereign wealth funds (49.8 per cent) were the largest source for joint ventures and club deals.
Some 42.9 per cent of new equity in 2013 went to opportunity funds – in 2011 just 8.4 per cent was allocated to this style. This corresponds with a significant drop in the amount allocated to core funds over the same period – from 86 per cent in 2011 to 44.9 per cent in 2013.
Germany (52.7 per cent) and the UK (40.2 per cent) together accounted for more than 90 per cent of new capital raised for single-country funds.
Casper Hesp, director of research and market information, says: “These results are further evidence of the global appetite to invest in the European market and the increasing appeal of non-listed real estate as an alternative to other asset classes.
“The fact that over 50 per cent of new equity was allocated to opportunity and value added funds suggests that the wider economic recovery is giving investors the confidence to take on more risk and seek out new opportunities.”