There is a shift toward investors committing to local emerging market fund managers, data firm Preqin has found.
(May 31, 2012) -- Investors in emerging market real estate are increasingly seeking local fund managers, according to research by Preqin.
Fifty-nine percent of capital raised for emerging market private real estate investments in 2011 was committed to fund managers headquartered outside developed markets, such as North America and Europe, the firm found.
"The shift towards investors committing to local emerging market fund managers highlights the increasing sophistication of the real estate industry in many emerging market regions," Andrew Moylan, Manager of Real Estate Data at Preqin, said. "Rapidly growing regions such as Asia have seen an increase in the number of local fund managers launching funds over the past few years, as well as the number of both domestic and international institutional investors that are turning to these firms for their local expertise."
According to Preqin's research, an aggregate $7.5 billion was raised in 2011 for private real estate funds targeting emerging markets, slightly above the $6.6 billion raised in 2010, but far below the $34.3 billion raised for such funds in 2008.
Moylan continued to note that despite steady appetite, the short-term outlook suggests a challenging fundraising environment for emerging markets, with many investors not actively looking for new investments or focusing on markets closer to home. "In the medium to long term, however, it seems likely that emerging markets-focused offerings will become more important to the private real estate market as a whole," he said.
Read Preqin's full report here.