Comparing Large, Mid-Sized and Small Asia-Pacific-Based Private Real Estate Funds – June 2016

by Jaren Loke

  • 20 Jun 2016
  • RE

Preqin’s Real Estate Online currently tracks 372 Asia-Pacific-based private real estate funds that have closed since 2007, which have secured an aggregate $94bn in capital commitments. The amount of capital raised by these funds has fluctuated in recent years: 31 funds closed in 2014 raised $5.3bn, the lowest aggregate capital raised since 2009. However, the following year saw 47 funds close for an aggregate $15.8bn, an all-time fundraising high for fund managers based in the region.

Of the amount raised in 2015, $7.9bn was secured by three large funds*, representing approximately half of total capital raised by Asia-Pacific-based funds that year. Nevertheless, while large funds have attracted significant amounts of capital from institutional investors, the vast majority of funds have been smaller. Large funds have accounted for just 5% of Asia-Pacific-based real estate vehicles closed since 2007, whereas small and mid-sized funds constitute 71% and 24% of funds closed, respectively.

As shown in the chart above, annual fundraising totals are correlated to the number of larger funds reaching a final close; 2013 and 2015 witnessed new peaks in fundraising due to five and three large fund closures respectively, representing 57% and 50% of the aggregate capital raised. Although small funds have raised comparable sums of capital each year, excluding 2013 and 2015, their average fund size has varied noticeably: the average size of small funds closed in 2007 was $139mn, dropping to $77mn in 2011 before increasing slightly to $90mn in 2015.

While it is still too early to determine how much capital fund managers in the region may secure in 2016, fundraising has slowed so far this year, with only 10 Asia-Pacific-based vehicles closed this year to date, with none securing over $1bn. Nevertheless, there remains a healthy pipeline of funds seeking capital: there are currently 57 Asia-Pacific-based private real estate funds in market, collectively targeting approximately $17bn. Of these, nearly two-thirds (65%) are small funds, 23% are mid-sized funds and only 9% are targeting more than $1bn.

*For the purposes of this blog, large funds are categorized to be those that have raised $1bn or more; mid-sized funds are between $300mn and $999mn in size and small funds are defined as less than $300mn.

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