Asset management Economy

Real estate major driver as private equity to continue outpacing stock markets

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Sunday 16, September 2018

Berkeley Assets says private equity is raising more capital than ever before, with sovereign wealth funds leading the surge of interest from institutional investors.

Real estate will be a key driver as private equity continues to outperform the world’s stock markets, a Dubai-based expert said today.

“The private equity industry is enjoying continued growth and success and in fact private equity is raising more capital than ever before. Private asset managers raised a record total of almost $750 billion globally in 2017 and private equity assets under management reached $5 trillion, an eight% year on year increase over 2016. Deal volume for private equity was $1.3 trillion in 2017, and although fewer deals were completed compared with 2016, deal sizes grew, and private equity approached even larger projects,” said Omar Jackson, Partner at Berkeley Assets.

Jackson said private equity is currently witnessing an increase in capital inflows from large institutional investors, particularly sovereign wealth funds, while moderate individual investment is also on the rise.

“The large investors often favour real estate based assets and deals which offer long term yield as opposed to potentially volatile short term deals. Our focus remains very much biased towards real estate backed businesses and we are allocating further capital to low-cost housing developments in the UK outside of London, as well as some interesting new themes re-emerging in the hospitality industry. Real estate continues to deliver predictable and reliable growth,” he said.

Jackson says private equity has “outperformed public markets consistently” since the financial crisis of 2008, adding that with the increase in capital under management, more competition in the search for attractive deals is seen.  This is forcing private equity firms to find new ways to create growth from existing assets and look at new and exciting areas of investment.

An off-shore multi-asset company with investments in real estate, hospitality, logistics and technology, Berkeley Assets has been actively tackling some of the misconceptions that surround the private equity industry.

“One of the biggest misconceptions is that private equity is only for high net worth individuals with huge sums of money, and institutional investors. What we are seeing more and more is that many individual investors who have moderate sums of money benefit from private equity growth. This retail market is a growing source of investment,” said Jackson.

 

 

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