Real estate will be a key driver as private equity continues to outperform the world’s stock markets, a Dubai-based expert said.
“The private equity industry is enjoying continued growth and success and in fact private equity is raising more capital than ever before,” said Omar Jackson, Partner at Berkeley Assets.
“Private asset managers raised a record total of almost US$750 billion globally in 2017 and private equity assets under management reached US$5 trillion, an 8% year on year increase over 2016.
“Deal volume for private equity was US$1.3 trillion in 2017, and although fewer deals were completed compared with 2016, deal sizes grew and private equity approached even larger projects.”
Jackson said private equity is currently witnessing an increase in capital inflows from large institutional investors, particularly sovereign wealth funds, while moderate individual investment is also on the rise.
“The large investors often favour real estate based assets and deals which offer long term yield as opposed to potentially volatile short term deals,” he said.
“Our focus remains very much biased towards real estate backed businesses and we are allocating further capital to low-cost housing developments in the UK outside of London, as well as some interesting new themes re-emerging in the hospitality industry. Real estate continues to deliver predictable and reliable growth.”
Jackson says private equity has “outperformed public markets consistently” since the financial crisis of 2008. He adds: “With the increase in capital under management, we are seeing more competition in the search for attractive deals. This is forcing private equity firms to find new ways to create growth from existing assets and look at new and exciting areas of investment.”
An off-shore multi-asset company with investments in real estate, hospitality, logistics and technology, Berkeley Assets has been actively tackling some of the misconceptions that surround the private equity industry.
“One of the biggest misconceptions is that private equity is only for high net worth individuals with huge sums of money, and institutional investors,” said Jackson. “What we are seeing more and more is that many individual investors who have moderate sums of money benefit from private equity growth. This retail market is a growing source of investment.”
Berkeley’s portfolio of properties spans multiple sectors and includes existing and new to market assets in some of the world’s most sought after locations.