Sentiment in the non-listed real estate funds market is dictated by uncertainties related to the underlying property market, valuations and ongoing financing issues, according to the latest INREV survey.
Investors and fund managers now think it unlikely that the property market will have improved by the end of next year, out of line with expectations at the end of 2008. Despite this subdued confidence the short term, the long term outlook is positive with 94% of respondents expecting the market to improve in five years time. Investors also still consider real estate as an important part of their multi asset portfolio.
Lisette van Doorn, Chief Executive, INREV said: "What we see is a difference in the rebound between the different real estate asset types. Listed real estate is already experiencing considerable capital inflows and the same applies for direct real estate. Non-listed property funds are trailing the other real estate types in the property cycle. Since the beginning of this year they have only attracted 14% of the equity committed to real estate.
"However, investors are considering commitments into non-listed property funds, as there a considerable number of new fund launches and existing fund investment opportunities in due diligence. This may indicate that investors are anticipating opportunities to emerge for non-listed funds not too far in the future."
Uncertainty about the property market, valuation issues and financing difficulties are the main reasons for investors to slow down making new investments. At the same time, fund managers are starting to see light at the end of the tunnel. Almost half of the fund managers (48%) are more confident that they are able to execute transactions at appropriate prices. This is also seen in the figures with non-listed property funds having transacted property assets sales of 3.6 bln. and acquisitions of 2.7 bln. since the beginning of this year.
The majority of the respondents (85%) continue to have confidence in the non-listed property fund model; although at this moment fund managers are slightly more optimistic than investors.
Lonneke Löwik, Director of Research and Market Information, INREV said: "Although fund managers are still spending most of their time on managing existing funds, this is slowly changing. We see that fund managers are reacting to opportunities in the market with some of last year's suspended funds being reintroduced and the first new funds appearing."