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Domestic Players Come to Market – Asian Real Estate Fundraising

by Oliver Senchal

  • 25 Apr 2018
  • RE

While Asia-based fund managers have been responsible for the majority of products offering investors exposure to Asian property over the years, the retraction in international capital post-crisis is apparent in the chart below. In the aftermath of the Global Financial Crisis, the level of participation in the Asian market by internationally located managers declined, and with that, their proportion of total capital raised decreased from approximately two-thirds in 2007/2008 to an average of a third since then. However, there have been exceptions where internationally based firms have had more success than domestic firms, mostly through US-based firms raising large vehicles – notably Morgan Stanley Real Estate Investing’s North Haven Real Estate Fund VII Global (closed on $4bn in 2010) and Blackstone’s Real Estate Partners Asia ($5bn in 2014).

More recently (2015-2017) there has been a gradual resurgence in participation from international managers in the Asian real estate market. Both the proportion of the number of funds closed and aggregate capital secured by managers based outside Asia for investment within Asia are on an upward trend; however, in absolute terms, fundraising is yet to come close to the $20bn raised by international managers in 2007/2008. Of the total capital raised by managers based outside Asia, US-based managers represent the vast majority (84%), followed by managers in the UK (8%) and Australia (3%).

In terms of capital raised domestically for investment in Asia since 2007, there is a significant trend for funds targeting their local market. The majority of funds focused on investment in the ASEAN, Northeast Asia and South Asia regions are raised by managers located in those regions, with Singapore, South Korea and Japan, and India dominating the fundraising landscape in their respective regions. While domestic managers account for a significant proportion (42%) of Greater China-focused capital raised since 2007, Singapore-based fund managers represent the majority (58%), driven by the closure of several large funds including CLF II ($3.7bn) and ARA Harmony Fund VI ($1.76bn).

Within Asia, Greater China-focused vehicles account for 49% of all capital secured since 2007 (excluding Pan-Asia-focused funds), with these vehicles also representing the greatest proportion of capital secured in the past three years. South Asia-focused funds constituted the greatest proportion of funds closed in both 2016 and 2017, with this fundraising activity likely driving the uptake in PERE deals in South Asia in recent years

For more detail on the Asian fundraising environment or the wider Asian real estate industry please click here to see the full report.

 

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