The term ?disruption? has come to signify off-the-charts seismic activity that is tearing down the old order. Businesses are leasing less office space to reflect ?leaner,? more streamlined operations. Retailers are looking for giant distribution centers to serve customers who expect convenient and immediate access to their products. Even real estate investors have caused disruption in the fund space by demanding more and faster information about who is allocating their capital and where.
There has been an increased interest in back-office operations outsourcing among real estate fund managers, proving how far interest in real estate fund administration has come in the industry.
The amount of global capital looking for real estate is huge, but mid-market funds cannot seem to get a break. The main challenge for the mid-market is that most investors have continued to be intensely selective of the funds they partner with. As for Latin America market, 2014 has been a challenging year for Brazil. Enthusiastic investors who joined the Brazilian real estate market several years ago are now pulling back. Furthermore, the downward trend in Brazil?s economic performance has not boded well for the country?s existing real estate stock.
Across Asian region, real estate investment activity continues to be stable. Asian investors are looking to invest closer to home more than they have in the past. Chinese funds, for example, continue to allocate a significant amount of real estate capital into the US and Europe but are increasingly exploring opportunities within Asia as well.
Malaysia and Singapore are both facing headwinds in their residential markets, owing to strict equity requirements for investment properties while India?s real estate sector, after years of standstill in new development, is beginning to see a reawakening, particularly in housing.
In 2015 ,we anticipate a continuation of these trends, which will fuel top-level pricing in the global gateway cities and push more investors into the opportunistic and value-added space in other markets around the world. This should bode well for the broader real estate industry.
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This article is written by the E&Y Emerging Markets Centre