Partners Group Private Markets Navigator, 2016
With market sensitivity and late cycle volatility likely to continue, we have sharpened our focus on making investments in robust property types and still see the greatest potential in real estate that can be adapted to accommodate shifts in demand.
Market overview
Low interest rates and limited development pipelines have continued to attract yield-seeking capital to the real estate asset class. Private real estate allocations have grown consistently over the past few years and are expected to continue to increase in 2016. This is at least partially attributable to the double digit total returns provided by global real estate in 2014 and 2015. Increasing allocations combined with record levels of dry powder are putting pressure on managers to source opportunities and deploy more capital over the next twelve months. The weight of this capital in the market suggests there is unlikely to be any significant pullback in asset values absent a global recession, the risk of which we currently deem to be relatively small.