Asia-Pacific-Based Investors in Value Added Private Equity Real Estate Funds – April 2013

by Ee Fai Kam

  • 10 Apr 2013
  • RE

In a blog entry last month, Preqin discussed the renewed investor appetite in the global market for value added private equity real estate funds, shown by the aggregate $11bn raised by 36 solely value added funds in 2012. But how is this trend playing out in the Asia-Pacific region, and which investors have a preference for value added real estate vehicles?

At present, there are 108 investors based in Asia-Pacific which have an interest in private equity real estate funds employing the value added strategy. Together, they hold $4tn in assets under management and have an average real estate allocation of 8.6% of total assets. Of these 108 institutions, 41% are Australian firms, 24% are based in Greater China (mainland China, Hong Kong and Taiwan), 11% are located in South Korea, while 9% are Japan-headquartered. The remaining investors come from India, Singapore, New Zealand and Malaysia.

The largest proportion of investors interested in value added private equity real estate funds are superannuation schemes; specifically, 38% of the 108 Asia-Pacific-based institutions are managers of superannuation benefits, all based in Australia. The long-term nature of value added property funds complements the long investment horizon of a typical superannuation scheme. The next largest group interested in value added vehicles are corporate investors (19%), while insurance companies make up 9% of this institutional capital pool. Other significant investor types in these funds are banks and asset managers, which represent 6% of the total each. The rest of the institutional capital in Asia-Pacific comes from organizations such as sovereign wealth funds, private equity firms and wealth managers.

Over the next 12 months, at least 34 of the 108 institutions based in Asia-Pacific which have an interest in private real estate funds employing the value added strategy will actively seek new investment opportunities in the real estate asset class and all of these 34 firms will consider committing to funds operating in the Asia-Pacific market. Out of these 34 firms, 62% will also consider investments in North America, while 53% are open to investing in the European private real estate market.

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