U.S. Investors Project $51 Billion in New Capital Commitments to Real Estate in 2016

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Apr 19, 2016, 11:00 ET

NEW YORK and SAN RAMON, Calif., April 19, 2016 /PRNewswire/ -- U.S. institutional investors, such as pension funds, endowments and foundations, plan to reduce their new capital commitments to real estate by 19 percent in 2016. An annual investor survey conducted by Institutional Real Estate, Inc. and Kingsley Associates projects $51 billion of new capital will be directed to the asset class in 2016, down from commitments of $63 billion in 2015.

"The results of the 2016 survey show U.S. investors remain bullish on real estate, and for the sixth consecutive year they believe real estate is the most attractive asset class on a risk-adjusted basis," says Jim Woidat, a principal at Kingsley Associates. "Investors, however, are becoming somewhat more cautious as the real estate cycle advances and pricing on prime properties has become elevated."

"In addition, with the accelerated investment activity of the past few years, many investors are at or near their target allocations for real estate," notes Geoffrey Dohrmann, president and CEO of Institutional Real Estate, Inc. "The survey showed that uncalled capital — capital that has been committed but not yet invested — increased 34 percent year-over-year to $41 billion. For these reasons, a slowdown in new capital commitments makes sense."

The survey also revealed U.S. core properties and value-added properties would receive the majority of new real estate investment capital, 34 percent and 31 percent, respectively. U.S. investors also plan to allocate 18 percent of capital to opportunistic investments and 11 percent of capital to foreign investment opportunities.

Survey respondents also indicated they view most property types as less attractive relative to the prior year, reflecting the general consensus regarding the ability to find accretive property deals given current asset pricing. Industrial and medical office properties received the highest scores, followed by multifamily, self-storage, office and retail.

This is the 20th year that IREI and Kingsley have teamed up to conduct the survey. A report detailing the complete results of the survey is available at www.irei.com/institutional_investors_realestate_trends

ABOUT INSTITUTIONAL REAL ESTATE, INC.
Institutional Real Estate, Inc. is an information company that produces publications and conferences for institutional real estate and infrastructure investors around the globe.

ABOUT KINGSLEY ASSOCIATES
Kingsley Associates provides business intelligence for the real estate industry. The firm offers research services and customizable tools and benchmarks to help property owners and investors maximize their portfolio and organizational performance.

SOURCE Institutional Real Estate, Inc.