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Private equity real estate managers are reducing their targeted returns due to asset valuations, according to Preqin. Its survey of 191 private equity real estate fund managers found that asset valuations were their chief concern.
Around 49% saw valuations as the biggest challenge over the next year, Preqin said.
An equal proportion noted an increase in competition for assets compared with 12 months ago, while the majority of respondents (58%) think it has become harder to find attractive real estate assets over the past year.
As demand increasingly outstrips supply for attractive investment opportunities, 63% of real estate managers have seen an increase in asset pricing, and more than one-third (35%) believe they have risen significantly.
Andrew Moylan, head of real estate products at Preqin, said the private real estate market remained “highly competitive, both in terms of obtaining investor capital and securing attractive assets”.
