(AMSTERDAM, THE NETHERLANDS) -- A 320-member association of European corporate investors and fund managers believes the global property market has another five years to go before it returns to a normal level.
The association is called INREV. It is little known among its U.S. counterparts but across Europe its 320 members collectively manage about €140 billion ($209 billion US) in real estate assets. (1 Euro = $1.49 U.S.) INREV focuses on non-listed real estate funds.
The group has completed a new study among its membership. Investors and fund managers now think it unlikely that the property market will have improved by the end of next year, out of line with expectations at the end of 2008.
"Despite this subdued confidence in the short term, the long term outlook is positive with 94% of respondents expecting the market to improve in five years time," according to PropertyFundsWorld.com.
Investors also still consider real estate as an important part of their multi asset portfolio.
Lisette van Doorn
"What we see is a difference in the rebound between the different real estate asset types," says Lisette van Doorn, Chief Executive, INREV.
"Listed real estate is already experiencing considerable capital inflows and the same applies for direct real estate. Non-listed property funds are trailing the other real estate types in the property cycle. Since the beginning of this year they have only attracted 14% of the equity committed to real estate."
Van Doorn adds, "However, investors are considering commitments into non-listed property funds, as there a considerable number of new fund launches and existing fund investment opportunities in due diligence. This may indicate that investors are anticipating opportunities to emerge for non-listed funds not too far in the future."
Uncertainty about the property market, valuation issues and financing difficulties are the main reasons for investors to slow down making new investments, according to PropertyFundsWorld.com.
At the same time, fund managers are "starting to see light at the end of the tunnel," PFW reports.
"Almost half of the fund managers (48%) are more confident that they are able to execute transactions at appropriate prices. This is also seen in the figures with non-listed property funds having transacted property assets sales of EUR3.6bn and acquisitions of EUR2.7bn since the beginning of this year."
The majority of the respondents (85%) in the INREV study continue to have confidence in the non-listed property fund model; although fund managers are slightly more optimistic than investors.
Lonneke Löwik, Director of Research and Market Information, INREV, says, "Although fund managers are still spending most of their time on managing existing funds, this is slowly changing.
"We see that fund managers are reacting to opportunities in the market with some of last year's suspended funds being reintroduced and the first new funds appearing."
INREV was incorporated in September 2002 and launched in May 2003. The group is a non profit association incorporated in The Netherlands.