Billion Dollar Club real estate investors dominate industry


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The global real estate industry has seen sustained growth in recent years, becoming a sought-after area of investment for institutions and HNWIs. A large proportion of this can be attributed to a small group of investors: the Billion Dollar Club.

This group, comprising those institutions which have USD1 billion or more allocated to private real estate, has just 433 members as of May 2017, 13 per cent of the total number of institutional investors in the asset class. However, they account for 84 per cent of the institutional capital allocated to the industry, and collectively hold USD39 trillion in assets under management.

The Billion Dollar Club of Real Estate Investors has grown over recent years. Preqin tracked 376 institutions allocating USD1 billion or more to real estate in 2014: this has risen by 15 per cent to 433 in 2017.

Cumulatively, the Club represents 84 per cent of institutional capital allocated to the asset class, despite accounting for just 13 per cent of the total number of active investors.
The largest proportion (29 per cent) of Billion Dollar Club investors are public pension funds, followed by insurance companies (22 per cent), asset managers (15 per cent) and private sector pension funds (15 per cent).

The single largest institutional investor in private real estate is the Abu Dhabi Investment Authority, which is estimated to allocate USD50 billion to the industry. 
Core strategies are most preferred by Billion Dollar Club investors, with 56 per cent looking to target them over the next 12 months. Significant proportions will also seek value added (49 per cent) and opportunistic (48 per cent) funds. 
Every geographic region is set to be targeted by a greater proportion of Billion Dollar Club investors in the next 12 months compared to other investors. In particular, 62 per cent of Billion Dollar Club investors will seek investments in Europe.

Andrew Moylan (pictured), Head of Real Estate Products, says: “Institutional allocations to real estate are dominated by a small group of investors which allocate large amounts to the asset class. Typically comprising the largest investors in terms of overall AUM, the Billion Dollar Club has seen its ranks swell in recent years, as investors seek the income opportunities, strong returns and low correlation to other asset classes of real estate investments.The scale of Billion Dollar Club investors’ involvement with the asset class affords them a lot of influence in the industry. These largest investors are best able to call for greater availability of alternative methods for accessing the asset class, as well as pushing for lower fees, more transparency, and more amenable fund terms. This has an effect on the wider investor universe, as fund managers seek to align their interests more closely with investors.”


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