Starting in 2003, Sumitomo Mitsui Trust Research Institute Co., Ltd. has conducted the "Survey on Private Real Estate Funds" as part of its research activities concerning real estate investment markets. •Based on the results of the survey, hearings and published information, we estimated the market size of private real estate funds (on an invested asset basis) as of the end of June 2019 to be 19.2 trillion yen.
Market Size of June 2019
[released September.11, 2019]
Assets under management (AUM) as of the end of June 2019 were 19.2 trillion yen （This figure involves Japanese assets managed by global funds）. AUM increased approximately 1,480 billion yen from the previous survey as of the end of December 2018. The pace of the expansion of the market for domestic private real estate funds, which had been increasing gradually, accelerated, and the market grew to a record size.
The number of asset managers whose AUM increased exceeded the number of asset managers whose AUM decreased, and there are some asset managers whose AUM increased significantly. Overall, the market size we estimated rose approximately 8.4% from the estimate in the previous survey. Both the numbers and AUM of private REITs increased, the total AUM of asset managers who only manage private funds (excluding private REITs) also increased. We realized that the market size of private real estate funds is expanding by the increase of both private REITs and private funds.
With debt financing conditions remaining favorable, many managers seem to believe that equity investors' appetite for investment is continuing at a high level.
As to a survey on acquiring or disposing properties in the first half of 2019, while the percentage of respondents who chose "Acquired" was just over 70%, the percentage who chose "Sold property" declined to just over 40%. With the number of properties held by open-end funds increasing while the investment period tending to lengthen, property sales by private fund asset managers are expected to decrease in the future.
(*)We define "global fund" as a fund targeting real estate investments in various countries including Japan.