NEW YORK CITY—It may be a time of investment activity on par with what we saw during the peak of the previous cycle, but it's hardly business as usual. In its new report on real estate private equity, EY uses the word “disruption” to characterize the tumult facing the global real estate sector. At the same time, however, Preqin reports that more than three-quarters of institutional investors active in the private real estate market intend to invest more capital into the asset class this year compared to 2014.

“The real estate industry is being disrupted by a number of new economic and social influences. Businesses are leasing less office space to reflect 'leaner,' more streamlined operations,” according to EY's report. “Retailers are looking for giant distribution centers to serve customers who expect convenient and immediate access to their products. Millennials and baby boomers want 'live, work, play' environments, instead of suburbs with large yards and two-car garages. Even real estate investors have caused disruption in the fund space by demanding more and faster information about who is allocating their capital and where.”

The disruption extends to capital flows, according to EY. “A rush of foreign capital is also having a disruptive effect on real estate pricing and opportunities in global gateway cities,” the report states. “As a result, spikes of activity are popping up in markets and asset classes that have lagged in recovery until now.”

As one manifestation of these changes, cross-border capital is pouring into US real estate as the country's economy recovers more rapidly than other global markets. That raises concerns of a bubble similar to the one that popped quite messily after major investments by Japanese investors in the late 1980s were followed by a recession. However, EY sees a number of fundamental differences between the pre-recession '80s and the current market.

“If we look at history, market collapses have always been preceded by deteriorating economic fundamentals and stress factors like overdevelopment and rising vacancy rates. So far, there is little evidence of these precursors,” says Mark Grinis, global real estate fund services leader at EY. He adds that “industry players have moved carefully along the risk spectrum, which is why we have not seen an excessive amount of development or movement in markets that lack significant economic drivers.”

One thing appears unlikely to change amid the current disruption is the proportion of institutions making new commitments to private real estate, Preqin says. “Thirty-seven percent of respondents definitely plan to invest, a very similar proportion to the 35% that were looking to be active when surveyed on their plans for '14,” according to Preqin.

Asia-based investors are the most likely to be active, with 76% expecting to make new commitments. In terms of investor size, the larger institutions are again more likely to be active this year, with 64% of respondents that have $10 billion or more in total assets planning new fund commitments.

Conversely, what is likely to change, says Preqin, is the amount of capital that active investors will put to work. Seventy-nine of institutions surveyed that will be active in the coming year are planning to deploy more capital than they did last year, with the remaining 21% holding the line.

Most of the active institutions intend to commit to two or more funds, with almost one-third expecting to make four or more commitments. Thirty-two percent of investors planning commitments this year are looking to invest in just one fund, with a further 29% expecting to commit to two vehicles, says Preqin.