U.S.-based real estate assets managed for foreign clients jumped 32% to $22 billion for the year ended June 30, reflecting the increased appetite for U.S. real estate investments, according to Pensions & Investments' annual survey of the largest real estate managers.
Total assets, including worldwide taxable and non-taxable assets, of the top real estate managers, climbed 13% to $555.7 billion. (This year, 114 managers responded to the survey; for 2003, 110 responded year.) U.S. institutional tax-exempt real estate assets of the largest managers grew 6% in the year. Tax-exempt assets of the top 50 managers increased 3.2% for the 12 months to $255.7 billion. During the survey period, the NCREIF Property Index returned 10.84%.
"Half of Europe wants to buy half of the U.S.," said Dennis Yeskey, national director of real estate capital markets for Deloitte, New York, explaining some of the foreign-client growth. "There's a lot of foreign money chasing real estate, partly for diversification."
Many international investors are expanding their real estate allocations by adding a global component that includes U.S. real estate. For instance, German pension plans and insurance companies expect to increase their real estate allocations by one percentage point to 5.6%, according to a recent survey by Heissmann Consultants, Wiesbaden, Germany.
In addition, most of the largest real estate fund managers are global firms.