20 April 2022, Amsterdam – Capital raising activity reached a record high in 2021, with at least €254 billion raised globally for non-listed real estate investment.
The Capital Raising Survey 2022, published today by ANREV, INREV and NCREIF, reveals a 107% increase on the €123 billion capital raised in 2020, demonstrating an exceptional recovery following the height of the Covid-19 pandemic. And the signs are that this upward trajectory will continue, with 76% of respondents expecting an increase in capital raising activity over the next two years – although the timing of the survey makes it difficult to assess the extent to which participants took the invasion of Ukraine into account.1
Capital for regional strategies reaches record highs
The capital raised for each of the regional strategies saw a significant uptick in 2021, reaching a record level for North America with a total of €90 billion – more than triple the €29 billion of 2020 and almost double the €51 billion raised in 2019. Similarly, new records were reached for Asia Pacific and global strategies, with the former increasing by 61%, while nearly tripling for the latter, compared to the 2020 results.
In Europe, total capital raised for non-listed vehicles amounted to €73 billion, marking a significant increase from the €51 billion raised in 2020 – perhaps unsurprising given the period of economic and investment uncertainty caused by the Covid-19 pandemic. The latest result is on a par with the previous European strategies’ record set in 2019.
Non-listed funds dominate
With 56%, non-listed real estate funds attracted the highest share of the total capital raised in 2021, maintaining their position as the most popular route to invest into real estate globally. Compared to other regions, capital raised targeting Europe was more widely spread among non-listed vehicle types, albeit non-listed funds remain the biggest beneficiary with 45%.
Joint ventures and club deals reported the most notable gain in allocations for European strategies, doubling their share of capital raised from 5% in 2020 to 10% in 2021, and amounting to a record high of €6.3 billion.2
Separate accounts investing directly into European real estate were the second most preferred vehicle type (23%), while real estate debt vehicles continued to gain importance among investors, maintaining their position as the third most attractive vehicle type for the second year in a row, with a total share of 19% in 2021.
Unlike the US where large open end structures are common, the European non-listed debt market is dominated by smaller closed end funds, in part explaining the dominance of local European capital which accounted for around 90% of the total capital raised in 2021. This is expected to change as the market evolves, with growing evidence of cross-regional investors taking an interest in the segment.
Residential and industrial/logistics led capital raised for Europe’s single sector equity strategies
For the first time since 2017, the share of capital raising activity for funds that follow a multi country and multi sector strategy declined, however, they still raised more than half (51%) of the total new capital targeting European strategies in 2021. In turn, funds that followed a multi country and single sector strategy increased their 2021 share of capital raised to 18%, up from 13% in 2020.
Of those vehicles following European single sector strategies, residential and industrial/logistics sectors raised the most capital in 2021, with 12% and 11% respectively. Industrial/logistics saw the largest increase in capital raising activity – close to double the 6% reported in 2020, and significantly above its 10 year average of 7%.
Core strategies in demand
The majority of capital raised for European strategies was earmarked for vehicles with a low-risk strategy. Out of the €55.4 billion raised in total3 72% was destined for core equity or senior debt strategies. While out of the €43.7 billion raised for vehicles investing in equity, €30.8 billion targeted core strategies. Value added equity strategies attracted €8.6 billion of capital in 2021, while opportunistic equity strategies bagged a total of €4.3 billion.
Iryna Pylypchuk, INREV’s Director of Research and Market Information, said: ‘The uptick in capital raising activity in 2021 reflects the pent-up demand accumulated during the most restrictive period of Covid-19 lockdowns and a surge in investor appetite for the asset class. These results indicate a positive outlook for the real estate investment industry, notwithstanding the challenges the investment managers have been facing in terms of capital deployment, with almost half of capital raised in 2021 yet to be invested.’
‘And, complex geopolitical, economic and inflationary outlook will put additional pressure on decision-making and deployment strategies in 2022.’
1 The Survey was conducted end of January to early March 2022, which makes the assessment of the extent to which participants took the invasion of Ukraine into account difficult.
2 Based on the reported value of €65 billion as for some submissions the breakdowns by vehicle type were not disclosed.
3 Based on the reported value of €56 billion as for some submissions the breakdowns by investment style and vehicle type were not disclosed.
– Ends –
For further information, please contact:
Johlyn da Prato, johlyn.da.prato@inrev.org | +31(0) 621397456
Justin St Clair-Charles, inrevteam@firstlightpr.com | +44 (0) 7769 644 059
Ellie Rust, inrevteam@firstlightpr.com | +44 (0) 7460 325 392
Notes to Editors
About INREV
INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.8 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe.
INREV has 485 members which include 116 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere.
The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.
About NCREIF
Based in Chicago, the National Council of Real Estate Investment Fiduciaries (NCREIF) is the American association of institutional real estate professionals who share a common interest in their industry. This includes investment managers, plan sponsors, academicians, consultants, appraisers, CPA's and other service providers who have a significant involvement in institutional real estate investments. They come together to address vital industry issues and to promote research. NCREIF acts as a non-partisan collector, processor, validator and disseminator of real estate performance information, including several quarterly indices. https://www.ncreif.org
About ANREV
ANREV is the Asian Association for Investors in Non-Listed Real Estate Vehicles, a not-for-profit organisation based in Hong Kong. ANREV's agenda is driven by the members, in particular the investors, and is focused on improving transparency and accessibility of market information, promoting professionalism and best practices, sharing and spreading knowledge. Fund managers, investment banks, lawyers and other advisors provide support in addressing key issues facing the Asian non-listed private equity real estate fund markets.
ANREV is a sister organisation to INREV in Europe and works with a number of other associations across Asia Pacific and North America on research and professional standards. http://www.anrev.org