Real estate private equity still declining despite summer pick-up - Swisslake Capital

Some 44 new real estate private equity funds have been established worldwide in recent weeks but these have not yet halted the declining trend characterised by a sharp drop in first half 2009 due to the financial crisis, says Swiss-based investment manager Swisslake Capital. Debt funds however show a growing trend.

The early part of the year was characterised by falling demand from institutional investors facing the 'denominator effect' - cutting property exposure in mixed portfolios to balance sharply depreciated holdings of assets such as equity and bonds - and difficulties to adjust portfolio allocations in general. However the survey, based on Swisslake database of 2,503 REPE funds and 958 managers, shows a slight improvement of investor sentiment for 2H09 and it expects stronger initiatives from fund managers now. "We have measured 44 new REPE funds established since July worldwide, which are not contained in our survey which only goes to end-June," Swisslake founder and CEO Bernhard Köhler told PFE. pfe (Full story to appear in next PFE/PIE editions)