The global real estate market is expected to pick up significantly over the next few years, with around $500 billion worth of real estate assets, held by closed-ended equity funds yet to be divested, likely to hit the market, according to an analysis from Savills.
Amid declining real estate values and tight funding conditions in 2023 and 2024, equity investors have delayed property asset sales in 2023 and 2024.
Assuming a typical five-year hold period, around $500billion worth of the property assets are estimated to have exceeded their exit timelines, the real estate advisor said in a statement based on the analysis released on March 10.
The study is based on research into the volume of property assets acquired by equity funds and investment manages between 2018 and 2019.
The $500 billion figure is derived by subtracting the assets disposed of between 2023 and 2024 from those purchased in 2018 and 2019.
“As a result, there is around $500 billion of pent-up sales that funds have delayed over the past two years,” said Savills.
“Now that a recovery in liquidity and values is evident, funds are increasingly likely to bring these assets to market,” it added.
It also expects a recovery in fundraising, with institutional investors’ money allocations holding largely stable
“The recycling of potentially $500 billion of assets as a recovery takes hold will provide important impetus to market liquidity over the next few years,” Rasheed Hassan, global head of cross-border investment at Savills, said in the statement.
Oliver Salmon, director of capital markets at Savills World Research, said that plenty of dry powder will increase deal flow in the real estate market.
“We are beginning to see this come through already,” he added.
By Yeonhee Kim
yhkim@hankyung.com
