Investment managers have increasingly been raising capital from institutional investors for value-add strategies, which typically focus on properties with untapped potential.

In the U.S., Crow Holdings has attracted $3.7 billion for its U.S. value-add real estate strategy. Pennybacker Capital’s sixth U.S. value-add real estate fund, which closed at $1.6 billion, includes allocations from the Texas Permanent School Fund and New York State Teachers' Retirement System.

In Europe, Revelop’s Swedish value-add fund has drawn in more than SEK2.4bn ($231 million), while a value add real estate investment firm has been launched by three former Patrizia directors.

“Momentum has been building for capital to be deployed into value-add and opportunistic strategies,” says Tim Graham, Global Lead for International and Strategic Capital at JLL. “Investors have been focused on allocating capital to strategies that promise to deliver strong risk-adjusted returns, as return requirements have risen due to higher debt costs.”

Value-add approaches accounted for 56% of preferences stated in the annual ANREV/ INREV/PREA Investment Intentions Survey. And with value-add strategies often encompassing sustainability efforts, a penchant among institutional investors for value-add was noticed by the Global Real Estate Sustainability Benchmark (GRESB). The survey saw a significant surge in the participation of value-add funds in its real estate assessment, tripling between 2019 and 2023 to 537.