CRE Assets May Be Overvalued, But Diversification Reigns
There may also be buying opportunities for fund managers who can draw down money..
Most CRE investors may think assets are overvalued, but there’s a silver lining: they still value the diversification benefits the sector brings.
Preqin’s most recent investor survey from November 2022 reveals that 74% of investors believe real estate assets are overvalued, with fund managers saying they expect valuations to fall. But according to Dave Lowery, Head of Research Insights, the diversification benefits “remain highly regarded” by investors. The asset class also provides a relatively reliable income stream, Preqin analysts say, while providing a potential inflation hedge.
“There may also be buying opportunities for fund managers who can draw down money, with 43% of survey respondents suggesting there’s reduced competition for assets compared with 12 months earlier. In our November 2021 survey, only 5% said they saw less competition,” Preqin First Close editor Shaun Beaney says, adding that internationally, solid demand remains for APAC-focused real estate funds.