The coronavirus crisis will present fresh challenges for real estate investors, with almost €80bn (£70bn) of combined capital targeting deals, a trade body for the private investment market has warned.
The latest Capital Raising Survey overseen by INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, found that property investment managers raised a record €201.3bn in capital globally during 2019, roughly 61% of which was invested by the end of the year.
However, with around €78.5bn still to be invested, INREV said managers “could now face additional difficulties with capital deployment as they adapt their strategies to deal with new and unprecedented social and economic challenges brought about by the Covid-19 pandemic”.
When surveyed during January and February, close to 70% of investment managers told INREV they expected a rise in capital raising in the next two years. “However, the new global macroeconomic environment will likely significantly affect the outcome of managers’ future capital-raising activities,” the association said.
Lonneke Löwik, INREV’s chief executive, said: “Some investors who might have considered themselves underweight in real estate before the Covid-19 pandemic could now find themselves over-exposed; and certain sectors, such as retail and hotels, will likely experience even more turbulent times ahead.
“We’re facing a new macroeconomic reality that will undoubtedly prompt a period of strategic reappraisal and asset revaluation.”
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