Global real estate assets under management (“REAUM”) doubled over the latter half of the investment cycle with the top 100 global fund managers increasing REAUM from $1.6 trillion in 2014 to $3 trillion at end 2018. Meanwhile REAUM held by the top 10 global fund managers expanded by 60%, pointing to increasing levels of global capital diversification.
Considering that increasing allocations to real estate from global institutions reached at least $840 billion in 2018, Colliers believes this figure could be twice the size when accounting for HNWIs and family offices.
Given that the institutional allocation to real estate only reached 10.4% as of end 2018, further growth in investment demand is anticipated in the years ahead. In fact, with the growing influence of high net-worth individuals (HNWIs), sovereign and family wealth and private equity changing the global capital landscape, growing capital sources will at least sustain investment volumes and push up pricing.
Colliers’ proprietary analysis of a range of global investors shows that at least two thirds of global investors either have, or are in the process of, deploying more funds in debt vehicles and alternative structures, some with a focus on development. This reflects the shift in acquisitions we have observed, as structural and late cycle factors shape activity.