Real estate, infrastructure and private equity managers anticipate strong growth in assets in the next five years, according to BNY Mellon.
Global macro-economic, social and environmental shifts are fuelling a need for investments in real assets, property and infrastructure worldwide, the bank and Preqin’s Building for the Future report revealed.
BNY Mellon and Preqin surveyed 340 private equity, real estate and infrastructure fund managers for the report.
Among its findings was the forecast that appetites for these assets will continue to grow, with 60 percent of infrastructure managers, 44 percent of real estate managers and 39 percent of private equity managers expecting their assets under management to increase by at least 50 percent in the next five years.
Alan Flanagan, global head of private equity and real estate fund services at BNY Mellon, commented: “Deep-rooted demographic and macro forces are driving an unprecedented need for investment in real assets such as transport facilities, communications networks, housing and hospitals.”
“These demands far outstrip the reach of government and public finances, and this creates huge opportunities for private capital to play a part in people's everyday lives.”
The report also found that while institutional investors, most notably pension funds and family offices, currently have the biggest appetites for real investments, almost half of the private equity and real estate fund managers surveyed believe that retail investors will account for a higher level of capital inflows by 2020 than they do today.
Investment, they said, will come from mass affluent and high-net worth individuals in developing markets, the continued expansion of sovereign wealth funds, and increasing numbers of defined contribution schemes.
"Investors are turning more and more to real assets to find yield, diversify their portfolios, and steer through volatile markets," Flanagan explained.
"The growth in real asset investments has been impressive and there is no sign of it slowing down. As a result, the marketplace has become increasingly competitive on deal sourcing, presenting challenges for managers to successfully deploy the capital they have raised."
