Asia-Based Investors Targeting Opportunistic Private Equity Real Estate Funds – November 2012

by Ee Fai Kam

  • 21 Nov 2012
  • RE

In October’s blog on the strategy preferences of real estate investors, we identified that opportunistic private equity real estate funds are the most popular strategy among Asia-based investors. Currently, there are 70 institutions in Asia which have a preference for opportunistic private equity real estate vehicles. Collectively, these investors hold $5.7tn in assets under management, of which about $6.9bn is allocated to unlisted real estate funds.

China-based firms make up 36% of these 70 investors, and more than half of these are headquartered in the traditional financial hubs of Beijing and Shanghai. Twenty percent of Asia-based investors with a preference for opportunistic private equity real estate funds come from Japan, while 14% are South Korea-based institutions. India-based firms comprise 10% of the total, while the rest are located in Singapore, Hong Kong, Malaysia, Taiwan and the Philippines.

In terms of geographical preference, almost all (97%) of Asia-based real estate investors with a preference for opportunistic private equity real estate funds will invest in Asian-focused vehicles. 42% are specifically interested in the Greater China region while 16% are open to South Asian property funds.  Only 13% of the investor pool is interested in Australasia. Outside of Asia-Pacific, 36% of these investors have a preference for North America-focused investments, while 32% will invest in Europe. Overall, a quarter of these 70 institutions are global investors which will invest in a wide range of locations.

At the moment, there are 185 opportunistic private equity real estate funds throughout the world actively raising capital. One significant vehicle is Brookfield Strategic Real Estate Partners, managed by Canada’s Brookfield Asset Management. The fund is an opportunistic vehicle seeking to raise $3.5bn to invest in properties in North America, Europe, Brazil and Australia. Within Asia, Secured Capital Japan is targeting $1bn for Secured Capital Real Estate Partners V.  The fund, which employs a mix of opportunistic, debt and distressed strategies, will take an exposure to a wide range of properties in the Japanese, Chinese, South Korean and Australian markets. Hong Kong-based Gaw Capital’s Gateway Real Estate Fund IV is also on the road; launched earlier this year, it is seeking to raise $800mn. The vehicle will invest predominantly in the Greater China region. Gateway Real Estate Fund IV also targets other parts of Asia such as ASEAN, and will invest in the housing, retail, hospitality and commercial sectors.

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