The Asia-Pacific private real estate funds market is a competitive one, and managers have to put serious thought into differentiating themselves in an increasingly crowded market. So what is the number of Asia-Pacific focused funds and what are their characteristics which have allowed them to raise capital successfully in the past five years? Preqin’s data shows that a total of 213 vehicles, each having a predominant focus on Asia-Pacific, have held a final close between 2008 and December 2013, raising a total of $75bn. Of these, 58 vehicles raised $31bn in 2008, while 37 funds closed on an aggregate total of $9.4bn in 2012. In the last five years, 2009 was the worst time to be an Asia-Pacific focused fund manager; only 23 vehicles succeeded on the fundraising trail, raising a total of $5.5bn. This year has proven to be a challenge; 25 funds have secured about $12bn in commitments, although the figures may rise as more information becomes available.
Overall, the majority of the 213 real estate funds are single strategy vehicles; 75% are either core, core-plus, debt, distressed, opportunistic or value added funds, while the remaining 25% utilize a mix of strategies. The top strategy employed by Asia-Pacific focused vehicles raised in 2008-2013 is opportunistic; 66% belong to this fund type. Opportunistic funds fulfill a demand in the Asia-Pacific region, especially in countries experiencing economic growth. At the close of China’s Third Plenum in November 2013, leaders pledged to continue supporting rural-to-urban migration, which is expected to result in the relocation of 250mn rural citizens to second and third tier cities in the next 12 years. This will generate a substantial demand for residential, commercial and industrial assets in China, for which opportunistic funds are well-poised to meet. Funds utilizing the value added strategy on a sole or partial basis account for 22% of the pool, while distressed vehicles make up the smallest portion at only 8%.