CBRE Investment Management’s AI-Enhanced Data Collection Method Reveals Global Real Estate Secondaries Market in Excess of US$23 Billion Annually

• CBRE Investment Management has developed an AI-enhanced process to gather and analyze global real estate secondaries transactions volume.
• Combined with proprietary in-house data logs and partial interest transactions, the new methodology reveals a more accurate and significantly greater market size than existing estimates.
• Data gathered and analyzed for 2023 found that in excess of US$ 23.4 billion worth of global real estate secondaries transactions closed—more than double the transaction volume implied by consensus estimates.
• CBRE IM’s methodology found in excess of US $16.4 billion worth of global real estate secondaries transactions closed over the first three quarters of 2024, indicating robust activity across the market.

More than US$23.4 billion worth of global real estate secondaries transactions closed in 2023 - 2.3x greater than existing market consensus estimates of roughly US$10 billion1, according to a new artificial intelligence (AI)-enhanced data capture methodology developed by CBRE Investment Management (CBRE IM), a global leader in real assets investment management.

CBRE IM’s enhanced process combines refined AI data capture techniques with proprietary in-house data logs and partial interest transactions to reveal a more accurate picture of the size of the global real estate secondaries market than using existing data capture protocols. The new methodology found global secondaries transaction activity reached in excess of US $16.4 billion over the first three quarters of 2024.

CBRE IM will soon release its Q4 and 2024 calendar year global secondaries transaction volume estimates, along with a white paper outlining the methodology.

Kilian Toms, Managing Director of the Real Estate Partners Strategy explains, “Secondary transactions tend to be more opaque, influenced by traditional practices that have maintained information asymmetries between participants. Our broadened market data capture methodology aggregates previously unrecognized transaction activity, which increases transparency in this evolving and critical part of the real estate transaction market.”

CBRE IM’s methodology combines data sourced in three distinct ways:

1. A proprietary deal log tracks secondary opportunities from all CBRE IM sources worldwide, including relationships with GPs, LPs, operators and advisors, for unparalleled visibility of off-market and secure marketed secondaries opportunities. The deal log monitors the closing of these deals, providing secondary-specific insights that are generally not available from external sources.
2. AI-driven transaction capture scrapes news sources and publicly reported transactions to identify structures and aggregate real-time secondary deal information, primarily at the entity level. This approach broadens the scope of analysis by capturing a wide range of public records that fit the expanded secondaries definition.
3. Partial interest transactions focused on ownership structure rather than changes in the capital stack are also reviewed. CBRE IM examines partial interest deals to add a property-level or broker/advisor contribution to the secondary market.

Regarding the methodology, Wei Luo, Senior Economist at CBRE IM, said: “Identifying the real size of the market requires a blend of proprietary real-time local market intelligence on a global basis, the ability to track off-market transactions within the sector and leading technology capabilities, including AI-driven transaction capture.”

CBRE IM’s AI-enhanced process incorporates the firm’s previously broadened definition of secondaries transactions that more accurately reflects the evolving market by including more types of activity:

• GP-led, direct secondaries or recapitalizations allow the operating partner to replace capital but stay in place and retain management of assets. These transactions are increasing as operators want to retain high-quality real estate assets that were previously traded every five to 10 years when funds expired; they no longer change hands nearly as frequently.
• Traditional LP-led secondaries are offerings in an existing fund or joint venture where the investment structure may be lacking in liquidity or can be operator-led transactions at the end of a vehicle’s life.
• Controlled equity/debt transactions occur when equity is exchanged in the capital stack while the operator remains in control of the assets.

As the secondary market and related investing strategies mature, traditional data capture methods – which already lag behind market structure evolutions – will become increasingly less reliable measurements of market size, underscoring how essential it is to adopt modern data capture methods.

Additionally, the more accurate market size assessment reveals an exponentially growing opportunity for investors and demonstrates the increased institutionalization of the real estate secondaries market.

Kilian Toms, Managing Director of the Real Estate Partners Strategy, concludes “Our analysis of the scale of the market underpins the critical role real estate secondaries are playing as an execution method for real estate investors on both the buy-side and sell-side.”

About CBRE Investment Management
CBRE Investment Management is a leading global real assets investment management firm with $148.3 billion in assets under management* as of September 30, 2024, operating in more than 30 offices and 20 countries around the world. Through its investor-operator culture, the firm seeks to deliver sustainable investment solutions across real assets categories, geographies, risk profiles and execution formats so that its clients, people and communities thrive.

CBRE Investment Management is an independently operated affiliate of CBRE Group, Inc. (NYSE:CBRE), the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE Investment Management harnesses CBRE’s data and market insights, investment sourcing and other resources for the benefit of its clients. For more information, please visit www.cbreim.com.

*Assets under management (AUM) refers to the fair market value of real assets-related investments with respect to which CBRE Investment Management provides, on a global basis, oversight, investment management services and other advice and which generally consist of investments in real assets; equity in funds and joint ventures; securities portfolios; operating companies and real assets-related loans. This AUM is intended principally to reflect the extent of CBRE Investment Management’s presence in the global real assets market, and its calculation of AUM may differ from the calculations of other asset managers and from its calculation of regulatory assets under management for purposes of certain regulatory filings.