Eighty East-Asia-focused private real estate funds have held a final close between 2008 and August 2012. These funds have a primary investment focus on Greater China, South Korea or Japan, and successfully raised an aggregate $37.3bn in capital. US-based fund managers raised 21% of the East-Asia-focused private real estate funds that have closed since 2008, accounting for 41% of the total capital raised. Hong-Kong-based GPs were responsible for 16% of the funds raised in this period while managers located in China and South Korea each raised 15% of the vehicles in this pool. The remaining 33% were raised by fund managers located in Singapore, Japan, UK, Australia and France.
Twenty-eight East-Asia-focused private real estate funds held a final close in 2008, raising a total of $22.3bn, making it the best fundraising year in this period. 2009 saw a significant downturn in fundraising, with only 10 East-Asia-focused private real estate funds managing to successfully hold a final close, raising a total of $3.7bn.
Fundraising activity rebounded slightly in 2010 with 16 East-Asia-focused private real estate funds holding final closes and raising a total of $4.3bn. The majority (69%) of these vehicles were China-focused, while 44% and 19% targeted investments in Japan and South Korea respectively. The largest fund raised in this period was Fortress Japan Opportunity Fund, an $830mn Japan-focused vehicle raised by US-based Fortress Investment Group, employing debt and opportunistic strategies.
The environment improved further in 2011 when 20 East-Asia-focused private real estate funds held a final close, raising an aggregate $4.5bn in capital. The majority (65%) of these private real estate funds employed an opportunistic fund strategy. Core and debt strategies were the next most common among this fund pool, with 25% and 20% of vehicles utilizing these strategies respectively. The largest East-Asia-focused private real estate fund that closed in 2011 was Macquarie Chinese Real Estate Fund II, raised by Australia-based Macquarie Infrastructure and Real Assets. The core fund closed at $1bn and exclusively targeted retail properties in China.
To date, six East-Asia-focused private real estate funds have closed in 2012, raising $2.5bn in total. Significant funds that have held a final close so far in 2012 include Singapore-based Capitaland’s $1bn CapitaMalls China Development Fund III, Real Estate Capital Asia Partners’ $530mn opportunistic fund RECAP III, and US-based Forum Partners’ $374mn Forum Asian Realty Income III. There are currently 39 other East-Asia-focused private real estate funds in market, targeting an aggregate of $16.3bn in capital commitments.