Asia-Pacific Private Real Estate Fundraising – May 2015

by Philip Wedge

  • 12 May 2015
  • RE

Fundraising for Asia-Pacific-focused private real estate funds is showing encouraging signs that investor appetite for less saturated markets is growing on a yearly basis. This can be seen in the growth in subscription to larger vehicles since 2011; figures show that vehicles over $500mn have been collecting a higher proportion of the total capital raised in the region year-on-year. Furthermore, the proportion of funds that have closed on less than $250mn has fallen every year since 2010, which could be another sign of larger fund managers asserting their dominance in the market.

As the chart above shows, 28 Asia-Pacific-focused vehicles raised $11.2bn in 2014, a slight fall from the total raised the year before, but the second highest amount of aggregate capital raised since 2008. Much of this is due to the success of Blackstone Real Estate Partners Asia closing on $5bn, accounting for 45% of the total capital raised in 2014. The slight fall in aggregate capital raised could be explained by the postponement of other managers’ fundraising efforts, until Blackstone’s real estate vehicle had officially closed. The fact that Blackstone Real Estate Partners Asia is the first Asia-Pacific-focused fund to reach a close of $5bn or above since 2007 clearly indicates investor appetite for the region is returning. Preqin’s Real Estate Online service gives weight to this hypothesis, as it shows that the number of investors targeting the region has doubled since H1 2013 from 6.2% to 12.7% in H2 2014.

Despite substantial increases in aggregate capital raised, the average time it takes Asia-Pacific-focused funds to close appears to be increasing. In 2012, the average time for funds to close was 17 months, whereas in 2014, this figure grew to just over 20 months. However, in 2012, Asia-Pacific-focused funds only raised 84% of their combined capital target figure, while in 2014, the fundraising process for these vehicles exceeded their managers’ expectations, raising on average 12% more than target levels.

Due to the absence of a mega fund in market targeting billions of dollars, it will be interesting to observe whether fundraising in the region will manage to surpass that of the previous year. It will also be interesting to monitor both the time that it takes these funds to close but, more pertinently, whether these funds are able to reach or even surpass the fundraising targets they set.

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