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Australasia-Based Superannuation Schemes Investing in Private Real Estate – October 2012

by Gayatri Pillai

  • 10 Oct 2012
  • RE

Superannuation schemes make up a significant proportion (33%) of the Asia-Pacific investors that are active in the private real estate space. Preqin’s Real Estate Online currently tracks 81 superannuation schemes investing in private real estate funds. These investors collectively represent over $533bn in funds under management, with an average allocation of 10% to the real estate asset class.

Smaller investors with less than $1bn in total assets represent 23% of superannuation schemes investing in private real estate funds. The majority (45%) of these investors manage between $1bn and $5bn in assets, while a further 12% oversee funds in the range of $5-10bn. The largest institutions, or those with total assets under management exceeding $10bn, account for the remaining 20% of this investor pool.

In terms of overall allocation to real estate, 41% of these investors have between $100mn and $500mn invested in property, 25% invest below $100mn, and 13% have real estate portfolios worth between $500mn and $1bn. Twenty-one percent of superannuation schemes investing in private real estate have over $1bn allocated to the asset class.

An overwhelming 97% of superannuation schemes investing in private real estate funds are Australia-based, with the remaining 3% located in New Zealand and Papua New Guinea. The majority of these superannuation schemes look to invest close to home, with 97% preferring to commit to vehicles investing in the Australasian region. Thirty six percent are interested in Europe-focused funds, while 34% and 32% have geographic preferences for Asia and North America respectively.

Core is by far the most popular strategy among superannuation schemes investing in private real estate, with 91% of these investors interested in such vehicles. Value added and opportunistic funds are the next most preferred, with 55% and 54% of superannuation schemes targeting these strategies respectively. Thirty-five percent of superannuation schemes investing in private real estate have an appetite for core-plus funds, and 22% prefer to invest in fund of funds vehicles. Private real estate funds with debt and distressed focuses appear to be the least attractive to this investor pool, with 15% and 9% favouring these vehicles respectively.

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