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Institutional Investors Plan to Come Back to Targeting Core CRE, New Intentions Survey Shows

A 2019 Investor Intentions Survey compiled by PREA, INREV and ANREV found institutional investors are coming back to core strategies.

A recent Investor Intentions Survey 2019 compiled by the Pension Real Estate Association (PREA), the European Association for Investors in Non-Listed Real Estate Vehicle (INREV) and Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) found that institutional investors raised their target allocations to real estate this year to 10.4 percent from 10.2 percent in 2018. (Last year, surveyed investors’ actual allocations to real estate averaged 8.9 percent).

When it comes to investment in U.S. assets, value-add is expected to remain the most popular strategy in 2019, with 53 percent of survey respondents choosing it as the most attractive option on a risk-adjusted basis. At the same time, however, investment in core properties is coming back into favor, with 41 percent of respondents choosing it as the most attractive strategy at the current point in the cycle compared to just 29 percent in 2018. Investors seem to be planning to take a pause on opportunistic strategies, with only 7 percent of respondents choosing it as the most attractive strategy in 2019 compared to 16 percent last year.

Looking at commercial property sub-sectors, survey respondents ranked office, multifamily and industrial as the three most attractive asset types for investment in 2019. New York, San Francisco and Los Angeles ranked as the top three markets for investment in U.S. real estate.

The survey included 154 respondents, all of them institutional investors and/or fund of fund managers based in Europe, North America and Asia Pacific. The largest two groups of respondents were pension funds and insurance companies.

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