Presently, there are 146 investors based in the Asia-Pacific region with an investment preference for core private real estate funds. Collectively, these 146 investors have assets under management (AUM) of $4.7tn, of which $162bn is allocated to the real estate asset class. These institutions have a combined allocation of $21bn to unlisted real estate vehicles.
The majority of this investor pool is based in Australia, with 55% situated in the country alone. Other prominent regions that are home to Asia-Pacific-based institutional investors interested in core real estate funds are South Korea (14%), Japan (11%), China (5%), India (4%) and Singapore (4%). Hong Kong, Taiwan, New Zealand, Malaysia and Thailand make up the remaining geographical regions where the remaining 7% of these 146 investors operate in.
In terms of geographic preferences, the highest proportion of these investors prefer to invest in the Asia-Pacific region. Seventy-two percent of the investor pool will look at funds with a focus on the Australasia region, while 69% invest in Asia. This should come as no surprise as these Asia-Pacific-based investors can utilize local knowledge to their advantage when investing in their home regions. Forty-seven percent of Asia-Pacific-based investors in core private real estate funds will consider Europe as an investment destination, while a similar percentage (48%) will look at the North American property market.
Having taken a look at the Asia-Pacific based investor community interested in private real estate funds employing the core strategy, what offerings does the real estate fund market currently have on the road to satisfy these investors? There are currently 66 core private real estate vehicles in market, targeting an aggregate $19bn. Sixty-five percent of these funds are Europe-focused while 24% invest predominantly in North American assets. Only 6% of core real estate funds in the market target the Asian region. The largest core real estate fund on the road is European Diversified Property, which is aiming to garner $1.2bn in total commitments. Managed by AXA Real Estate, the vehicle focuses on quality assets in western European countries such as France, Germany and Sweden. The second largest core real estate fund in the market is SEB Asian Property Fund II. It is looking to raise $800mn to invest in a diversified portfolio of office, retail, multi-family and industrial assets in countries such as China, Japan, South Korea and Singapore. Another significant Asia-focused core fund is Mapletree Japan Business Space Fund. The manager, Singapore-based Mapletree Investments, is aiming to secure $280mn in commitments to invest in income-producing business space, data centre and R&D properties in Japan’s Greater Tokyo region.