Opportunistic private real estate funds are responsible for new developments and are important in most markets. This is especially so in developing economies within Asia, such as China and India. A combination of a growing population and an increase in rural-to-urban migration has led to greater demand for new residential, office and retail space.
Are Asia-Pacific-based investors taking advantage of such investment opportunities domestically? Preqin’s data would seem to suggest that this is the case. At present, 130 out of 284 Asia-Pacific-headquartered investors in private real estate funds will consider the opportunistic strategy and an overwhelming 97% of these investors do so within Asia-Pacific. Collectively, these 130 investors have $10tn in assets under management, of which more than $21bn is allocated to private real estate funds. Preqin’s extensive interviews with investors have revealed that a number of Asia-Pacific investors in opportunistic funds will be actively looking to make new commitments in the next 12 months, including a prominent asset manager, which is planning to invest between AUD 2.5bn and AUD 3bn in private real estate over the coming months.
The group making up the largest proportion of the Asia-Pacific-based investors in opportunistic private real estate funds is superannuation schemes (34%). These long-term investors are located in Australia, New Zealand and Papua New Guinea. Corporate investors form the next largest group in the investor pool, with 17% belonging to this category. Asset managers account for 8% of Asia-Pacific-based investors in opportunistic real estate funds, while insurance firms make up 7%. The remaining institutions include sovereign wealth funds, pension funds, banks and wealth managers.
Asia-Pacific-headquartered investors targeting opportunistic real estate funds have available 207 such funds in market worldwide, targeting a total of $79bn. Of these funds, 37 have a predominant focus on Asia-Pacific and are looking to raise aggregate capital of $17bn. These 37 Asia-Pacific-focused opportunistic real estate funds target a variety of asset types; 69% invest in residential apartments, 41% are interested in retail properties while 41% prefer office buildings.
The largest Asia-Pacific-focused opportunistic real estate fund in market is Blackstone Real Estate Partners Asia. The vehicle takes a pan-regional approach, investing in a diversified range of properties in Australia, China, India and Japan. At present, it has already secured $1.5bn in commitments, which is 38% of its $4bn target. Besides offerings from established managers like Blackstone Group, there are also first-time funds competing for investor capital. Moonbridge Capital Greater China Development Fund is one such vehicle; the maiden fund is seeking to raise $400mn to invest in office and residential assets in China’s tier II and III cities.