Raising new funds still may be a challenge, but real estate managers are already getting their investment groove back from a slump caused by the worldwide pandemic, resulting in their combined global assets under management increasing 13.9% to nearly $2 trillion in the year ended June 30.
This is the first year of double-digit growth in worldwide real estate AUM in Pensions & Investments' annual real estate money manager survey since 2018, with managers now breathing a collective sigh of relief that the 2020 downturn wasn't as bad as everyone feared, thanks to federal intervention.
Real estate assets for U.S. tax-exempt institutions also rose in the 12-month period but at a slower pace — 6.8% to $652.4 billion. By comparison, real estate assets managed for U.S. tax-exempt investors were up 2.9% in the prior 12-month period.
"June of last year … is where we started coming out of the deer-in-the-headlights moment from COVID," said Eric Adler, London-based president and CEO of PGIM Real Estate. "From late February to early summer, we were just expecting a much more dramatic downturn and shutting down."
Managers placed their bets on two sectors that had already begun their ascent before the pandemic — industrial and multifamily — and stayed away from retail and hospitality, which were being hammered by the global shutdown.