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Asia-Based vs. Australasia-Based Investors in Private Real Estate Funds – December 2012

by Gayatri Pillai

  • 05 Dec 2012
  • RE

Institutional investors based in Asia and Australasia have become significant sources of capital for the private real estate asset class. Preqin's Real Estate Online database currently tracks 157 investors based in Asia that invest in private real estate funds, and a further 106 investors based in the Australasia region. These investors collectively represent more than $12.5tn in assets under management, of which over $195bn is allocated to the real estate asset class. Asia and Australasia-based investors are often grouped into a single category of investors; however, the two investor pools often display distinct characteristics in terms of fund strategy preference and geographic scope.

Preqin data suggests that Australasia-based investors have an appetite for lower risk investments in comparison to their Asian counterparts. The overwhelming majority of investors located in Australasia prefer to invest in relatively stable core real estate funds, with 88% favouring this fund strategy. Core funds are less favoured by Asia-based private real estate investors, which are equally attracted to higher risk opportunistic funds, with 56% of this investor group willing to commit to either fund strategy. Approximately 50% of both Asia- and Australasia-based private real estate investors have an appetite for value added funds, while only 18% of Australasia-based investors are willing to invest in debt funds, as compared to 37% of private real estate fund investors in Asia. Similarly, only 13% of Australasia-based investors favour distressed vehicles, while almost a quarter (24%) of Asia-based investors are interested in private real estate funds employing this strategy.

In terms of geographic investment scope, the majority of investors in both groups look to invest close to home, with 94% and 95% of private real estate investors preferring Asia and Australasia-focused funds respectively. In fact, 47% of Australasia-based investors exclusively target domestic private real estate funds. Thirty-seven percent of Australasian private real estate investors are interested in investing in Asia-focused funds, however only 10% of Asia-based investors have a geographic preference for Australasia. Australasia-based investors also appear to have a higher appetite for private real estate funds focused on Europe and North America, with 37% and 32% of this investor pool favouring these regions respectively, as compared to 26% and 28% respectively of private real estate investors based in Asia.

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