H1 2022 Global Real Estate Report

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Private real estate fundraising appears to be on the decline, an unexpected development for a strategy generally seen as an inflation hedge. At the beginning of this year, real estate allocations were expected to increase, but during the first half of the year, this growth did not materialize.

A shift in investor interest has combined with shifts in opposing market forces to alter the landscape, according to our latest Global Real Estate Report, sponsored by Baker Tilly.

Among the takeaways:

  • In the first half of the year, real estate accounted for a lower share of total capital raised in the private market than in any year, partly due to the attractiveness of real estate assets in the context of the recent constant infrastructure performance.
  • Real estate’s one-year-ahead IRR hit 24.8% through 2021 – its best performance in a decade and just short of the all-time high reached in 2011 – but preliminary figures for the first quarter of 2022 show that the good fortune might not last.
  • With the specter of a recession or market correction looming and the growing bid-ask spread between buyers and sellers, some investors may be waiting for a reset in the economic cycle to allocate more aggressively to real estate.
  • Opportunistic funds dominated capital raised, accounting for more than 50% of the total, while distressed funds fell to just 1%. It may seem surprising given today’s market, but our data shows less correlation between distressed fundraising and economic downturns than you might expect.
Contents
Key points to remember 4
Definitions of types of real estate funds 5
Insight 6
A word from Baker Tilly 12
core and core more 14
Added value 16
Depressed and opportunistic 18
Debt 20
Public and private show 22
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