Fund managers and investors are choosing to extend the life of their funds rather than terminating them, according to INREV, the European association for investors in non listed real estate funds.

INREV's study, launched at Munich's Expo Real trade fair, revealed that 59% of funds scheduled to terminate between 2009 and 2011, will continue the fund, which equates to €15.8bn of assets.

The Amsterdam based assocation said challenging conditions in the European real estate market mean investors and fund managers have decided that now is not the best time to sell assets.

"Fund managers and investors alike would currently prefer to continue in order to recoup their capital as the market recovers. However, this does not mean that all investors would prefer not to terminate now as some have their own liquidity issues or because of debt or other issues in the fund. Some investors are forced to stay invested in funds they would prefer to exit due to difficulties in liquidating at prices acceptable to the other investors," it said.

Lisette van Doorn, CEO, INREV, added: “It is absolutely clear that fund managers and their investors are working very closely to achieve the best outcomes for each fund taking into account the very few real alternatives available in the current difficult market.

"While in the last few years, the termination decision was heavily influenced by the scarcity of re-investment alternatives, this is less of an issue right now. Trust in the fund manager as well as issues at investor level, such as the need for liquidity, play a much more prominent role in the decision making process of investors.”

INREV also reported that investors which are continuing to support funds are also seeking more information and preparation from their fund managers and in some cases are seeking business plans for all assets.