Global real estate AUM balloon to US$3.2 trillion

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INVESTORS appetite for properties show no signs of waning with the global real estate assets under management growing to US$3.2 trillion in 2018, with American giant Blackstone making history by smashing the US$200 billion mark for the very first time, and the industrial property market boom has lifted Goodman to the top of the Australian chart.

According to the latest ANREV / INREV / NCREIF Fund Manager Survey, total global real estate AUM jumped by 12% from US$2.8 billion in 2017.

Blackstone was the clear global leader with US$230.6 billion in real estate AUM, an increase of 19% from US$193.8 billion in 2017.

In second place was Canada’s Brookfield Asset Management which also enjoyed double digit growth of 20.5% in real estate AUM to US$187.3 billion.

In third was PGIM with US$168.9 billion, Nuveen Real Estate and Hines conclude the quintet of managers with US$124.6 billion and US$119.4 billion respectively.

ANREV director of research Amélie Delaunay said this year’s survey shows strong trends for assets under management intended for real estate.

“The general uptick in AUM volumes and significant growth of some individual managers, reflects continuing consolidation in the real estate industry.

“Almost a fifth of managers reported involvement in mergers or acquisitions over the past 10 years, with 30% of them citing the expansion of global footprint as the main motivation for M&A activity,”

Asia Pacific continues to make gains, representing 18.4% of total real estate AUM in 2018 – an increase from 16.9% over the year. However, both European and North American strategies continued to represent the lion’s share, making up 35.3% and 34.8% of the total respectively.

CapitaLand Limited dominated the Asia Pacific AUM ranking in 2018, ranking first with US$55.9 billion; followed by GLP with US$36.3 billion and Mapletree with US$28.3 billion.

Delaunay said the surge in total real estate assets under management generally and among specific managers is further evidence of real estate’s important diversification role, with the increase in Asia Pacific’s share of total real estate assets under management a reflection of this trend.

“It is clear from the findings that non-listed real estate funds are the vehicle of choice for investors looking to gain exposure to this important asset class,” Delaunay said.

In Australia, Goodman was leader of the pack. Thanks e-commerce and third party logistics boom, the industrial property giant is on track to exceed AU$45 billion of AUM.

In second place was Lendlease, followed by AMP Capital, Dexus, Charter Hall, Vicinity Centres, GPT, QIC, ISPT and Investa closed out the top 10 list.

However Lendlease top the list of Australian fund managers by Asia Pacific AUM, followed by AMP Capital, Goodman, Dexus, Charter Hall, Vicinity Centres, GPT, ISPT, QIC and Investa.

Meanwhile non-listed real estate vehicles continue to represent for the lion share of global AUM, accounting for 84.0% or US$2.7 trillion, with funds comprising almost half, 46.5% of the total real estate AUM.

Listed and other real estate represent 10.9% and 5.1% respectively.

The same trend was witnessed in Asia Pacific with unlisted real estate making up 73.6% of AUM; although this is less than the 87.7% for European strategies and 75.2% for North America.

Within Asia Pacific non-listed real estate, non-listed funds represented more than half of the non-listed real estate vehicles AUM at 57.2%, in line with the 57.8% for Europe and 51.1% for North America.

The source of capital for non-listed direct real estate vehicles with an Asia Pacific strategy mostly originated from Asia Pacific investors, 75.1%, in line with the general bias of regional strategies being funded by domestic capital. This was followed by North American investors, 14.2%, and European investors, 10.2%.

Asia Pacific strategies show a greater level of diversity in their investor base than European strategies, where 80.2% of AUM is sourced from within the region. North American strategies, however, source only 61.4% of their AUM domestically, while almost 40% comes from other regions.

In terms of investor composition, pension funds dominate the global scene with the largest share of capital into non-listed direct real estate.

For Asia Pacific strategies, pension funds represent over half – 50.2% – of unlisted direct real estate. In Europe and North America, this is less than half, accounting for 43.8% and 42.1% respectively.

Sovereign wealth funds are the next largest source of capital for real estate in Asia Pacific, making up 15.7%, followed by insurance companies, which amount to 11.2%.

Australian Property Journal