(August 16, 2012) – Most major institutional funds are happy with their current real estate investments, and are looking to make new ones over the next 12 months, according to new survey data from Preqin.
These results “suggest an increase in appetite for private real estate funds,” said Andrew Moylan, a real estate data manager with Preqin, in a statement. A total of 70% of investors with at least $10 billion said they are likely to invest in the coming year, while only 26% of investors responsible for less than $1 billion answered the same.
Optimism over real estate trended geographically, as well. Just 32% of investors in Europe are likely to commit to new investments during the next 12 months, while nearly three-quarters (72%) of respondents in Asia said they are seriously considering it. In North America, 32% responded favorably to the idea.
California’s state employees’ pension system (CalPERS) is definitely interested. The $238 billion fund has committed $530 million to two new real estate funds that will target investments in China, according to a Thursday announcement. One of the funds, which will receive $480 million from the West Coast pension, will focus on “high quality office buildings in central business districts and retail malls in well-located, densely populated suburbs in the first and second tier cities” in mainland China and Hong Kong. The remaining $50 million is a second investment in ARA Asset Management’s Dragon Fund. CalPERS’ initial investment earned returns of 8.4% over the last three years. This time around, the fund will primarily target developed, urban property in mainland China, Singapore Hong Kong, and Malaysia.
“Income growth and urbanization remain the key themes for growth in China,” said Joe Dear, CalPERS CEO, in a statement. “China’s office and retail sectors offer stable rental income and potential for capital value growth.”
Other investors apparently agree with Dear about real estate in general, and Asian property in particular. The majority (73%) of the more than 100 respondents to the Preqin aurvey—regardless of fund size—said their recent real estate investments has met or exceeded their expectations.
Read Preqin’s entire report here.