Real estate investments may be a fountain of pain at the moment, but buy-side jobs for real estate specialists are poised to expand.
Real estate will be the most popular alternative asset class among institutional investors over the next few years, a PricewaterhouseCoopers poll showed. About 41 percent of those surveyed said they plan to raise their allocation in real estate in coming years. Many of those plans focus on real estate in emerging markets, especially China, PwC's John Forbes told MarketWatch.
That points to increased demand for property experts with the skills to acquire and manage portfolios of either residential or commercial real estate in China and other growing markets.
At this point, the case for further gains in Chinese property values rests on the expansion of the middle class over the next 20 years, said Forbes, who heads PwC's real estate practice in the UK. Prosperity will spur demand for better housing and new retail and office space, he said.
Perhaps surprisingly, many investors also are looking to ramp up real estate exposure in developed markets where values have plunged lately. For instance, Forbes said in the UK - where commercial property values are down as much as 20 - 25 percent since last summer - investors who exited two or three years ago at the bubble peak are starting to see opportunities to reinvest. On the other hand, a significant 21 percent of investors polled said they expect to lower their real estate exposure.
Private equity came out almost as popular as real estate in the PwC survey. Some 40 percent of institutions plan to raise their PE exposure. To be sure, the credit crunch has reshuffled the toolbox of skills and contacts needed by PE dealmakers. Tomorrow's deals will tend to rely on improving a business' operations - such as by replacing the management team - rather than on just financial engineering, said Rob Mellor, UK financial services tax leader at PwC.
As for hedge funds, 33 percent of institutions said they plan to raise exposure in coming years.