PE real estate firms on the rise

The number of new private equity real estate firms in the world increased by 180 this year reaching a total of 680, a new report said.

Inspite of the difficulties in the real estate sector, the number of PE real estate firms continued to grow, it said.

Salaries too were relatively stable and only around 14 per cent of the firms reduced base salaries. It was C-level executives who saw their incentive payouts fall by more than 40 per cent, twice the proportion of junior level professionals who saw their compensation cut, according to 2010 Preqin Private Equity Real Estate Compensation and Employment Review

The median total annual cash compensation for a CEO of a private equity real estate firm with less than $2 billion (Dh7.34bn) in assets under management is $594,000, compared to $1.65 million for a CEO of a firm with more than $10bn in total assets, said the Prequin review. The growth in the number of firms continued and the total would be closer to 770 if private equity real estate firms that do not raise distinct funds, such as the ones which manage corporate or personal capital and those that manage third-party capital without pooling into a commingled private investment vehicle, are included.

"Despite the difficulties in real estate markets worldwide for the past couple of years, the trend has not been affected with 180 new private equity real estate fund managers established over 2008 and 2009, bringing the total to approximately 680."

"Beneath this lies a further tranche of smaller firms that invest lesser sums of capital, raising money from private sources such as friends and family."

In total, the 770 private equity real estate firms employ an estimated 11,100 people worldwide, the majority of which are based in the United States.

According to the report, the UAE employs 120 people, a share of around 1.1 per cent of the industry.

Salaries remained relatively stable, said the Prequin review.

"Many private equity real estate employees have seen cuts between 2008 and 2009 in the overall remuneration provided to them. Despite this, base salaries have generally remained relatively stable, with only a few firms making cuts to the employees' basic rate of pay," it said.

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