Real estate fund industry reaches inflection point
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Real estate fund industry reaches inflection point 06 December 2018Hong Kong Reporter: Maddie Saghir
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The real estate fund industry has reached an inflection point, according to a Vistra research report on the global non-listed real estate (RE) industry.
The report examined the insourcing and outsourcing operational model and how the various operational functions are carried out, and it found that regulation has the biggest impact on business.
According to the report, nearly three-quarters of respondents (74 percent) stated that regulatory change has the biggest impact on their businesses.
The focus is understandable as a result of the successive waves of regulation on real estate funds such as the EU’s Alternative Investment Fund Managers Directive (AIFMD) in particular, and most recently the second Markets in Financial Instruments Directive (MiFID II), Vistra revealed.
This has led to greater costs on staff and compliance, additional structural issues and potential restrictions on business.
In the context of increasingly complex data requirements, technology expenditure is important for both asset managers and sovereign wealth funds (SWFs).
The report found that 79 percent of respondents believe that their IT spend will remain the same or increase over the next five years.
Additionally, the report noted that the use of outsourcing is a changing picture; in the majority of cases, asset managers and SWFs retain over half of their functions internally.
Close to half of the respondents (47 percent) foresaw an increase in the functions outsourced with a 51 percent increase in the volume of activity outsourced.
It was also highlighted that asset managers and SWFs refer to a wide variety of options to outsourcing, and their choice outsourcing model is broadly based rather than being reliant on a few major criteria.
Onno Bouwmeister, group managing director of alternative investments of Vistra, commented: “Increased regulatory complexity has been affecting every aspect of the real estate fund industry in recent years.”
He continued: “It has therefore created huge business opportunities for experienced external fund administrators such as Vistra who become an increasingly important component of their operational models by helping businesses address these requirements.”
“Committed to the real estate market, Vistra advises some of the most successful and significant fund managers including real estate firms in the market, with over $263 billion of alternative investment fund assets under administration.”
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