PE Fund Managers Plan to Spend More on CRE

The skyline of London, where Preqin is headquartered. (Photo: Colin)

LONDON—Even as a broader cross-section of institutions has expressed some reservations recently about commercial property in the near term, private equity real estate managers remain true blue. A Preqin survey of over 180 real estate fund managers finds that two-thirds of firms intend to deploy more capital over the next 12 months compared to the previous year, while nearly half are planning to invest significantly more.

Preqin notes that while fund managers have record levels of dry powder at their disposal—an aggregate $250 billion as of February—this has led to increased levels of competition, and placed pressure on asset pricing. Survey respondents said they’ve seen the greatest uptick in competition for lower-risk assets, with 55% of firms stating that competition has increased, compared to 41% that say the same of opportunistic assets. Managers see valuations as a key concern for the year ahead, with 52% rating it as their chief concern, and many have reduced their performance objectives as a result.