European RE fund managers overhauling administration setups
08 November 2011 London
Image: Shutterstock
State Street research shows administration outsourcing trends are likely to continue for European real estate fund managers on the back of complex regulatory compliance regimes and growing globalisation.
"As institutional investor allocations to real estate assets continue to grow, fund managers are increasingly turning to an operating model that prioritises outsourcing and closer collaboration with third party service providers to concentrate on their core investment skills," reports the firm.
Along with a resurgence in real estate investment, institutional investors are looking for more information and seeking a greater understanding of investment strategies, in turn, demanding increased control over their investments, greater flexibility over entry and exit from funds, and more transparency and granularity in reporting.
Meanwhile, fund managers are examining their risk management and cost structures and considering significantly expanding the services they are outsourcing to third parties. The areas expected to grow fastest are fund accounting and administration services, performance analytics and look-through reporting services.
Currently 27 per cent of fund accounting and administration services are outsourced while 22 per cent would consider outsourcing in the future. Additionally, more than a third of the respondents are prepared to consider lifting out already established core in-house administrative functions, largely on the back of new regulatory demands.
Simon Burgess, vice president, real estate fund services for State Street’s Global Services business in EMEA, said, “The growing demands from investors, ranging from increased flexibility to more rigorous reporting, add to the costs of doing business for fund managers, while more rigorous standards of regulatory compliance also add to complexity and cost. Real estate fund managers are becoming acutely aware of the investment required to maintain cutting-edge technology platforms, to support capabilities such as analytics and reporting and in response they are increasingly turning to service providers to access this expertise.”
State Street's European Real Estate Fund Manager Study was conducted in partnership with Preqin and generated some 50 responses from managers across the region.
"As institutional investor allocations to real estate assets continue to grow, fund managers are increasingly turning to an operating model that prioritises outsourcing and closer collaboration with third party service providers to concentrate on their core investment skills," reports the firm.
Along with a resurgence in real estate investment, institutional investors are looking for more information and seeking a greater understanding of investment strategies, in turn, demanding increased control over their investments, greater flexibility over entry and exit from funds, and more transparency and granularity in reporting.
Meanwhile, fund managers are examining their risk management and cost structures and considering significantly expanding the services they are outsourcing to third parties. The areas expected to grow fastest are fund accounting and administration services, performance analytics and look-through reporting services.
Currently 27 per cent of fund accounting and administration services are outsourced while 22 per cent would consider outsourcing in the future. Additionally, more than a third of the respondents are prepared to consider lifting out already established core in-house administrative functions, largely on the back of new regulatory demands.
Simon Burgess, vice president, real estate fund services for State Street’s Global Services business in EMEA, said, “The growing demands from investors, ranging from increased flexibility to more rigorous reporting, add to the costs of doing business for fund managers, while more rigorous standards of regulatory compliance also add to complexity and cost. Real estate fund managers are becoming acutely aware of the investment required to maintain cutting-edge technology platforms, to support capabilities such as analytics and reporting and in response they are increasingly turning to service providers to access this expertise.”
State Street's European Real Estate Fund Manager Study was conducted in partnership with Preqin and generated some 50 responses from managers across the region.
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