Real estate funds worldwide have amassed a record $255 billion in unspent capital commitments as of July 30, up from $237 billion as of Dec. 31, according to a Preqin report released Friday.
At the same time, 68% of real estate managers surveyed by Preqin in June indicated that real estate is more expensive than it was 12 months ago, with 20% seeing no change and 12% saying its cheaper than a year ago. As a result of managers' view of market conditions, Preqin reported that 55% of managers aiming to raise a $5 billion or more real estate fund are lowering their fund's return targets, compared to 38% of managers targeting funds of $1 billion to $4.9 billion and 43% for funds with targets ranging between $500 million and $999 million.
Also, 75% of core-plus managers are changing investment strategies, with one unnamed European manager reporting it is including value-added and opportunistic investments, and others based in North America moving into new markets. Some 50% of value-added and 50% of debt managers are also altering their primary investment strategies.