As reported in the July 23, 2009, issue of Brighton House Associates Investor Monitor, BHA analysts noticed a spike in investor interest in real estate funds in mid-July. During the past week, analysts have identified a considerable amount of new interest, specifically towards real estate funds within the European investor community. Institutional and private investors alike are significantly increasing their exposure to real estate, with some raising their allocation targets from 5 percent last year to more than 20 percent currently.
Investors are searching for ways to lower risk and gain more stability in their portfolios-mainly to hedge against fluctuations in equity markets. Real estate, as indicated by European investor interest, seems to be an appropriate approach.
A wealth advisor based in Finland is currently evaluating value-add investments from European commercial property funds. The firm is focused on commercial property due to the wealth of opportunities that the economic crisis has generated. The firm invests primarily in European-focused funds, as well as a few funds focused on Asia or Russia. It will begin evaluating and investing in U.S. property funds throughout the next year.
A consultant based in Denmark is researching real estate funds to present to its pension fund clients toward the start of the fourth quarter. For some of these clients, it is their
first venture into real estate; it is a new focus after completing an internal review of their asset allocations during the past few quarters. The consufirm is focused on opportunities from all real estate investment strategies. It is beginning to look at real estate funds worldwide now that pension funds want to add globally diversified products.
As reported by Thao Hua on Pensions and Investments’ Web site, “…some European institutions are increasing their real estate investments. Among the investors diversifying and/or raising their allocations are the £34 billion ($55 billion) BT Pension Scheme, France’s €7 billion ($10 billion) French Public Service Additional Pension Scheme, Denmark’s e6.2 billion Doctors’ Pension Fund, the 24 billion Danish kroner ($4.5 billion) Danish Pension Fund for Engineers, Britain’s £1.8 billion Avon Pension Fund and the £550 million London Borough of Islington Pension Fund.” (For article click here).
BHA analysts continue to see a significant increase in interest in real estate funds from their network of European investors and expect the trend will carry on through the fall.
