The European financial and economic crisis continues to negatively affect the non-listed real estate fund industry. For fund raising, this resulted in 2011 being another challenging year for the industry.
According to the annual INREV Capital Raising Survey, institutional non-listed real estate funds raised €9.3 billion of equity in 2011. Compared with 2010, the total estimated amount of raised equity is down by 9%. Current levels are still almost 70% lower than what was achieved at the height of the capital raising cycle in 2007.
As a result of the increased uncertainties in the European market investors became more risk averse and preferred to commit their capital into lower risk core funds. In 2011, 86% of capital was raised by core funds compared to 73% in 2010. Value added funds raised only €0.4 billion compared to €1.9 billion in 2010. Opportunity funds raised €0.6 billion in 2011, representing a substantial increase compared with the €40 million that was raised in 2010. This outcome indicates that investors already see opportunities in the current challenging market conditions and are therefore allocating more capital to opportunity funds.
Source : INREV