Investors Beginning to Re-Evaluate Real Estate Funds
As an asset class, real estate did not receive much investor attention in 2008 or the better part of 2009. As the real estate market starts to show signs of recovery, however, investors are beginning to add the asset class back into their portfolios and take advantage of the opportunities that fund managers can profit from.
During the past three months, BHA analysts have noticed a rise in investor interest in real estate. Much of this interest has come from wealth advisory firms. They made up 31 percent of the real estate mandates in the past three months. It seems that private investors are more apt to invest in longer-term investments than institutional investors.
For example, a U.S. wealth advisor that invests across all alternative asset classes still likes to have exposure to real estate. It is currently looking to build a network of managers for possible allocations. The firm was not allocating toward real estate funds last quarter and although it remains cautious it currently would like to take advantage of the opportunities the asset class is presenting.
International investors are also showing interest in real estate. A wealth advisor based out of Switzerland is always allocating and researching real estate funds. On an annual basis the firm allocates roughly $200 million to real estate funds. The firm is open to all strategies and focuses on the United States, Europe and emerging markets funds. It looks for managers who have raised at least three funds. The firm express its interest in real estate saying it offers low correlation, attractive yields, and stable payouts.
BHA analysts will continue to track investor interest in real estate, but for now it seems to be on the rise as investors begin to loosen their liquidity requirements. BHA expects this to be the trend into the new year.