Global real estate investment managers reach AUM of EUR3.3 trillion

Total global real estate assets under management (AUM) hit EUR3.3 trillion in 2020, despite the challenges of the global pandemic.

The Fund Manager Survey 2021 published today by ANREV, INREV and NCREIF, highlights the strength of real estate as an institutional asset class. The latest results build further on the massive gains of the past decade with total AUM more than tripling from EUR0.9 trillion in 2009 to EUR3.3 trillion at the end of 2020.

A significant proportion of total AUM (37 per cent) is attributed to the top 10 global managers, while the largest 39 managers in the upper quartile of respondents by number account for 78 per cent of the total. Interestingly, despite the greatest concentration of global AUM in larger fund managers, the growth in 2020 came from the lower quartiles, albeit the overall impact is very marginal.

This year’s survey saw a rise in the number of participants to 154 – up from 140 the previous year.

The top two slots are unchanged from last year with the Blackstone Group leading the pack of managers with AUM of EUR260.5 billion, followed by Brookfield Asset Management on EUR172.4 billion. Prologis is at number three with AUM of EUR121.0 billion, moving up from 6th place in 2019 – the result of strong value growth in the logistics / industrial sector. PGIM Real Estate are fourth with EUR118.8 billion, and Nuveen retains its fifth-place ranking with an AUM of EUR108.4 billion.

The remainder of the global top 10 is made up of: AXA IM Alts (6th – EUR96.0 billion), CBRE Global Investors (7th – EUR92.3 billion), UBS Asset management (8th – EUR88.7 billion), MetLife Investment Management (9th – EUR82.9 billion) and Capitaland (10th – EUR81.7 billion). Each of the top 10 fund managers posted an AUM of at least EUR80 billion in 2020.

Hines, which was fifth on the list last year, has dropped to 14th in the current survey and Swiss Life dropped from 9th to 11th over the same period. These falls were due in large part to the introduction of a new, streamlined definition of AUM (see ‘Notes to Editors’).*

With 39.1 per cent of total global AUM, European strategies account for the lion’s share, overtaking those in North America (32.2 per cent) in 2020. Asia Pacific strategies contribute 17.9 per cent to the total, while global strategies are at 10.5 per cent.

At an individual manager level, AXA IM Alts tops the European strategies list with AUM of EUR76.1 billion, followed by Swiss Life Asset Management in second place (EUR73.7 billion) and The Blackstone Group (EUR65.9 billion) in third. All of the managers included in the European strategies’ top ten list posted AUM of more than EUR39 billion.

With an AUM of EUR102.4 billion, Brookfield Asset Management tops the list of managers in North America, where PGIM Real Estate is second with EUR 98.2 billion AUM. The third largest North American manager is Prologis on EUR83.0 billion.

The three largest managers with Asia Pacific strategies are ARA Asset Management (EUR54.5 billion), Capitaland (EUR 51.3 billion) and GLP (EUR34.5 billion). Interestingly, the two largest are way ahead of the rest, each with total real estate AUM of over EUR50 billion. Only the top three in this region have an AUM of more than EUR30 billion each.

The largest manager following a global strategy is The Blackstone Group which reported more than US$114 billion; nearly double the AUM of the second largest, Brookfield Asset Management. The Blackstone Group is the only fund manager to feature in the top 10 rankings in all three main regions, as well as for global strategies.

Non-listed real estate vehicles account for a substantial 83.1 per cent of the total global AUM. Looking closer at the non-listed real estate vehicles only, non-listed real estate funds continue to dominate globally, with a 56 per cent share. Next are separate accounts investing directly, followed by JVs and clubs.

The proportion of total global AUM attributed to non-listed real estate debt products rose from 7.6 per cent in 2019 to 9.4 per cent in 2020. In Europe, the uptick was even more marked – climbing to 8.1 per cent from 3.6 per cent the year before. These shifts offer further evidence of the growing importance of debt products to investors.

For the first time, the Fund Manager Survey captures data related to dry powder held by managers to assess the state of the industry in terms of total contractually committed capital from investors, which is available and ready for deployment but is not yet invested. It reveals a total of EUR195 billion of dry powder or 9.3 per cent of total global AUM based on the 64 per cent sample of respondents to this question. This is a healthy result and confirms the strength of interest and investor demand for global real estate. Both the upper and third quartiles of respondents each carry a consistent 8-9 per cent of dry powder.

Around 20 per cent of respondents globally were involved in merger activity in both 2019 and 2020, while the equivalent results for acquisitions were a little lower at 16 per cent and 14 per cent respectively. Managers in the Asia Pacific region accounted for the largest share of mergers in 2020 at 25 per cent, versus 18 per cent for their counterparts in Europe and 17 per cent in North America, reflecting the different stages of evolution in each of the regional markets. But across all regions, a third of managers (33 per cent) referenced ‘multi-rationale’ as the main driver for M&A activity, suggesting several motivations the most likely of which are the different aspects of diversification.

On a projected basis for activity in 2021, this figure increases to 36 per cent. Looking ahead, 7-8 per cent of all respondents globally are planning M&A activity in 2021.

Lonneke Löwik, INREV CEO, says: ‘The evolution of the global growth in fund managers’ AUM speaks to a continuing robust appetite for the asset class. This is particularly encouraging given the challenges of 2020 in light of the global health pandemic. The details also reveal some interesting signposts for the future, healthy levels of dry powder that indicate the capacity to execute deals, as well as strong demand for non-listed real estate funds and considerable emphasis on the European debt products. All of the above provide a broad level of comfort for the year ahead, and especially as many global economies are also starting to recover.’