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Real Estate

Unlisted real estate fund-of-funds allocations spike in 2017, study finds

Investors globally allocated a record $8.5 billion to non-listed real estate funds of funds in 2017, more than double the prior year's $3.3 billion, according to Hong Kong-based ANREV and Amsterdam-based INREV, the respective Asian and European associations for investors in unlisted real estate vehicles.

That increase had fund-of-funds allocations accounting for 5.3% of the record $160.2 billion ANREV and INREV reported in April raised from investors globally for non-listed real estate in 2017, a news release from the groups said.

The 5.3% weight was itself a record for the five-year life of the ANREV-INREV capital-raising survey. For the prior four years, fund-of-funds allocations had accounted for respective 2.6%, 4.5%, 1.7% and 1.6% of total capital raised.

Global strategies, with just less than 50% of investment vehicles but 78.6% of total net asset value, delivered a 4.4% return for the year, while European strategies generated 6.6% — both little changed from the year before.

But Asia-Pacific funds of funds rebounded from the prior year's decline of 3.3% to deliver a 15.1% gain.

Roughly $700 million of the $8.5 billion total was raised for funds of funds focused on Asia-Pacific. Amelie Delauney, ANREV's Hong Kong-based director of research and professional standards, in the news release, called the scale of Asia-Pacific returns for 2017 "significant, demonstrating their increasing appeal in the region."