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Australasia-Based Investors in Real Estate - April 2013

by Farhaz Miah

  • 17 Apr 2013
  • RE

Preqin currently tracks over 140 Australasia-based institutions investing in real estate. These investors have an average current allocation to real estate of 10% of total assets and an average target allocation of 14.2%. In terms of total assets base, 35% have less than $1bn in assets under management, 33% have $1-4.9bn and 10% have $5-9.9bn in total assets. A further 10% have between $10bn and $19.9bn under management and only 12% have more than $20bn in total assets. When breaking down these investors by their overall allocations to real estate, it is revealed that 9% of Australasia-based investors have less than $10mn in real estate, 17% have allocated $10-49mn and 30% have $50-249mn allocated to the asset class. A further 12% have $250-499mn allocated to property and only 14% have $500-999mn invested in the asset class. A sizeable 18% of investors have an allocation to real estate of $1bn or above.

How do the real estate allocations of Australasia-based investors match up to the rest of the investor universe? Generally other real estate investors have lower allocations as a proportion of total assets to real estate than their Australasian counterparts. This general trend of Australasia-based investors allocating more to real estate is typified by the fact that only 11% of Australasia-based real estate investors have an allocation of less than 5%, compared to 38% of all other investors allocating below 5%. Around 46% of Australia-based investors allocate between 5-9.9% compared to 36% of all other institutions investing within these ranges. Although 26% of all other investors allocate 10% or more to real estate, this is paled by the 43% of Australasia-based investors that allocate 10% or more.

Australasia-based investors have a strong preference for lower-risk core vehicles, with 88% of such investors considering these funds. There is also considerable appetite for value added and opportunistic funds, with 49% and 47% of Australasian investors considering such vehicles respectively. Core-plus funds are considered by 38% of Australasia-based investors, demonstrating a strong desire to access low-risk income-producing real estate with a blend of value added characteristics. Debt funds are favoured by 19% of Australasia-based investors, while a further 17% consider the fund of funds route to access private real estate. Distressed funds are on the radar of 14% of Australasia-based investors.

Australasia-based investors have a strong geographic bias towards investments focused on home markets within Australasia, with 94% of investors based in Australasia exhibiting a preference for domestic markets. Around 38% of Australasia-based investors pursue global opportunities, while 35% seek out opportunities focused on Europe. Around 33% of Australasia-based investors consider investments in funds focused on Asia, while 30% target North America-focused vehicles. South American funds are considered by 10% of Australasian investors, whereas funds focused on Africa and the Middle East are only on the radar of 5% of Australasia-based investors respectively.

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