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Gap between actual and target allocations to real estate narrows dramatically

Investors still set to hike commitments, in defiance of late cycle


10 January, London – Current average allocations to real estate increased to 10.0% from 8.9% in 2018, against an increase in target allocations from 10.2% to 10.4%, significantly narrowing the gap between the two for the first time, according to the global Investment Intentions Survey 2019, published today by INREV, ANREV and PREA.  

However, global institutional investors remain bullish about real estate indicating their intention to place a minimum of €72.4 billion of new capital into the asset class in 2019, continuing the recent trend of positive sentiment. Around €47.6 billion of this total is earmarked for non-listed vehicles.

Half of all investors will increase their allocations over the next two years, while only 9.3% expect to decrease their allocations, and 40.7% anticipate no change.  

Looking at the AUM-weighted results, 80.4% of investors intend to increase allocations, indicating that larger investors will likely commit more than their smaller counterparts.

On a regional basis, the majority of European investors expect to increase their allocations, while most of those from Asia Pacific and North America expect no change. More North American investors will decrease their commitments, than their counterparts in other regions.

Diversification and enhanced returns remain the two main benefits attracting all investors to the asset class.

Risk off

For investors targeting Europe, there’s been a significant shift in favour of core, which rose from 31.8% to 39.1%, while opportunity dropped from 18.8% to 9.8%. In comparison, value added retains its status as the preferred investment style overall, with 51.1% of investors still attracted to the risk-adjusted return prospects it offers.  

These results suggest investors may be taking a more risk-averse approach to their real estate investments, in preparation for the approaching late stage of the current cycle.

Brexit pinch 

Overall, the UK, France and Germany remain the dominant European destinations for investors, though the order of priority has shifted since the last survey. This year Germany topped the list of preferred investment locations, selected by 66.7% of respondents, while the UK – number one in 2018 – is second at 64.6%, and France is third at 62.5%.

Funds of funds managers expressed a different order of preference placing the UK top, with the Netherlands second, followed by Spain.  But while London / office is still at number three in the list of preferred city / sector combinations, European investors are less enthusiastic about the UK than their counterparts from North America and Asia Pacific.  

It seems likely that the reality of Brexit has affected sentiment on the UK, and this year’s respondents are indicating that Germany will be one of the beneficiaries.

Alternative thinking

The office sector remains the most popular, selected by 93.8% of investors, followed by retail at 75.0%, residential at 70.8% and industrial at 60.4%. 

Interestingly, investor interest in alternatives is also growing.  At 33.3% and 31.3%, respectively, student accommodation and healthcare have become increasingly appealing.  However, for these sectors to have a more meaningful impact on their traditional rivals, they will need to increase in scale and investors will need to acquire new skills to get comfortable with different operating models.

Vehicular access

Over 50% of investors already invested in non-listed real estate funds in Europe will increase their allocations to these vehicles in the coming 24 months. Commitments to JVs and club deals appear to be slowing down relative to previous years, though nearly 57% of international investors expect to increase their allocations.

This year and next, most investors will increase or maintain their commitments to directly held real estate and separate accounts, reflecting the ongoing desire for greater control.  Separate accounts witnessed the strongest growing trend in commitments signalling the high demand for this route into real estate. 

Commenting on the survey results, Lonneke Löwik, INREV’s CEO, said: ‘With considerable amounts of cash continuing to flow into the market, investors are clearly focused on long-term investing.  But, given that real estate cycles are typically 10 years one can say that we’re now in the late stage of the current cycle. The key questions raised are how are investors preparing themselves for an inevitable rise in interest rates, and how will this affect their investment decisions this year and their intentions to increase allocations beyond 2019?’ 

– Ends –

For further information, please contact: 
Johlyn da Prato, johlyn.da.prato@inrev.org, +31(0)621397456
Lauren Hewitt, inrevteam@firstlightpr.com | +44 (0) 7776 146 434
Jack Rodgers, inrevteam@firstlightpr.com | +44 (0) 7580 427 746

Notes to Editors

About the Investment Intentions Survey 2019

The Investment Intentions Survey provides insight into expected trends in real estate investment industry in 2019. It explores aspirations for investment over the next two years, with a focus on non- listed real estate funds. 

The survey is a joint project between INREV, ANREV and PREA, so providing a comprehensively global perspective. It is published once a year in January.

For the first time, this year’s survey was entirely focused on international investors and funds of funds managers. It attracted a total of 154 respondents (144 institutional investors and 10 managers), 85 from Europe, 41 from North America and 28 from Asia Pacific. The largest two groups of investors were pension funds (79) and insurance companies (22).


INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.7 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe.

INREV has 437 members which include 75 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere.

The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands. 


ANREV is the Asian Association for Investors in Non-Listed Real Estate Vehicles, a not-for-profit organisation based in Hong Kong. ANREV's agenda is driven by the members, in particular the investors, and is focused on improving transparency and accessibility of market information, promoting professionalism and best practices, sharing and spreading knowledge. Fund managers, investment banks, lawyers and other advisors provide support in addressing key issues facing the Asian non-listed private equity real estate fund markets.

ANREV is a sister organisation to INREV in Europe and works with a number of associations across Asia Pacific and North America on research and professional standards. http://www.anrev.org

About PREA

Founded in 1979, the Pension Real Estate Association (PREA) is a non-profit trade association for the global institutional real estate investment industry. PREA currently lists over 700 corporate member firms across the United States, Canada, Europe and Asia. Our members include public and corporate pension funds, endowments, foundations, Taft-Hartley funds, insurance companies, investment advisory firms, REITs, developers, real estate operating companies and industry service providers. http://www.prea.org