Blackstone Group, one of the largest real estate investors in the world, has announced plans to launch a new real estate fund with a $13 billion warchest. We should see the offer document over the coming weeks although it is known that the company has already been in contact with major investors. When you bear in mind that the company already generates 45% of its earnings from real estate investments this is a massive boost for the worldwide sector.
Perhaps the major attraction of Blackstone is the fact that the company is willing and able to invest in everything from individual family properties to distressed assets in any part of the world. The company has also been heavily involved in leveraged buyouts of real estate/property companies in the past – many of which have earned the company billions of dollars in profits and income.
What does this mean for the worldwide real estate sector?
There’s no doubt that when companies such as Blackstone are looking to create yet another enormous real estate fund it is time to sit up and listen. There may be concerns about the worldwide economy, the US may not be performing as many had hoped and the European debacle continues today. However, as with any investment, and in particular real estate, it is the long-term potential which should be focused upon rather than short-term fluctuations.
Quote from PropertyForum.com: “There is much talk of crowd funding for an array of businesses but some people are now looking down this route in relation to their real estate investments. Is crowd funding a viable option in the modern day real estate market?”
The company has attempted to play down investor hopes in the short to medium term, noting that the past performance of very successful Blackstone real estate funds is unlikely to be emulated in the short to medium term. However, it is the history and experience which comes with an investment through Blackstone which is certain to attract the billions of dollars the company is looking for. Who would bet against the company raise the full $13 billion?
Are real estate funds the way forward?
This is a question which is asked time and time again, are real estate funds the less risky and the more sensible option for both individuals and investors? The reality is that purchasing individual properties yourself does offer greater risk but with this risk comes potentially greater reward. It is also worth noting that you can make good money on a number of transactions and lose everything on one bad deal. So, unless you’re prepared to put the time in researching markets and individual properties then perhaps real estate investment funds are something that you should consider?
The fact is that we are all different, we all have different goals and perhaps more importantly we all have very different financial situations. If you’re looking to invest in property, whether directly or through real estate investment funds, it is imperative that you take the correct professional financial advice to ensure your funds are protected and you are given the best opportunity to create a long-term return.
While a $13 billion funding call from Blackstone may sound excessive, especially in the current economic situation, this is a company which is second to none in the real estate industry and willing to research everything from individual properties to bombed out commercial companies. When looking towards companies such as Blackstone you should consider any investment on a long-term basis because markets are volatile, economies are very unpredictable at the moment and the real estate sector is very closely affiliated with trust, confidence and perhaps above all fear.