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Investors identified timing and pricing as two key aspects of indirect real estate liquidity. Entry timing is constrained by the time it takes to underwrite an investment in a non-listed vehicle, capital queues in popular commingled funds and the pace of deployment of capital of closed end funds. Exit timing is impacted by the lock up periods of closed end funds and the ability of open end funds to meet or suspend redemptions.
Investors’ perception on the importance of timing and pricing fluctuates over time. During periods of economic distress, the requirement for cash increases and thus investors prioritise timing and become less price sensitive. As one investor surmised, ‘In different parts of the cycle, either pricing or timing becomes more important’. In essence, it is the trade-off between timing and pricing that is crucial.
Source : INREV