INREV, the European Association for Investors in Non-listed Real Estate, has estimated that the 36 vehicles in its newly established fund of funds database have a combined target equity raising of €12 billion ($17 billion).
The association collected details from 36 fund of funds with an approximate total target equity of €10.9billion, though six funds did not give figures leading INREV to estimate at the total volume.
Twenty- two of the vehicles are closed ended and 14 open ended. On average they have invested in 10 underlying funds, though the average target is to invest in 14.
INREV said there had been a steady rise in the number of vehicles being invested since first emerging in 2003. In 2004 there were four vehicles, in 2005 there were six, and in 2006 there were 10, peaking this year with 14. The average target internal rate of return is 12.1 percent. Of the total target equity in funds of funds where managers indicated their investment strategies, €3 billion will target core vehicles, €5.3 billion value-added and €2.1 billion will look to invest in opportunity funds.
The association concludes that 68 percent of the £12 billion is targeting Europe, 17 percent Asia, while 4 percent is allocated to invest in US vehicles.
Andrea Carpenter, research director, said there was robust growth in Asia. “This shows that the Asian investment market is leapfrogging the historical evolution in Europe. Unlike in Europe where the rise of the underlying non-listed real estate funds was followed by funds of funds, both forms of vehicles are developing in parallel in these emerging markets.”