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Real estate funds

Over the last 10 years the real estate industry in Europe has become subject to capital markets discipline which in effect drive greater efficiency. Property prices have increased over time due to the large amount of capital looking to be invested and thus the market now has more of a financial base. As a result, there is a surplus of capital looking for quality products, which means that investors are having to look elsewhere for assets.

Real estate as an investment asset is increasingly attractive given the volatility of the equities market and relatively low yielding bond market. The industry is also attracting significant allocations from financial institutions and investment funds.

Key trends in the market include:

  • A surplus of capital
  • Increased allocations to real estate by asset managers
  • Increased governance
  • Accounting transparency requirements on corporate companies
  • Increased pressure on public sector organisations in order to create value out of their existing asset base

There has also been a major shift towards specialisation demonstrated by institutions transferring assets to specialist indirect investment vehicles, and this is expected to continue. As a result of these trends, we expect to see a further migration of assets from the corporate and public sectors to specialist owners and greater focus on existing owners and occupiers maximising value from real estate.

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