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Far East-Based Investors in Private Real Estate Funds - August 2013

by Ee Fai Kam

  • 02 Aug 2013
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The Far East region is a significant part of Asia - it forms only 15% of the entire land mass of Asia, but Far East-based firms make up 60% of the entire Asian private real estate investor pool. Far Eastern economies are a mix of developed and developing nations; Japan, South Korea and Singapore form a triumvirate of advanced economies while countries such as Cambodia, Malaysia, Thailand and the Philippines are in various stages of progress towards a developed market status. Preqin’s Real Estate Online shows that there are 99 investors with an interest in private real estate funds located in the Far East. These investors hold $8.2tn in assets under management (AUM), which is approximately 53% of the AUM held by all private real estate investors based in Asia. Collectively, these 99 investors have allocated more than $99bn to the real estate asset class.

So which countries are Far Eastern investors in private real estate funds located in? Unsurprisingly, Japanese, South Korean and Singaporean firms make up the majority of these investors; 42% of Far Eastern investors in unlisted property funds hail from Japan, 33% are headquartered in South Korea while 15% operate in Singapore. The remaining investors are located in Thailand, Malaysia and the Philippines.

Japan has the largest pool of pension funds after the US, and these institutions typically invest with a long horizon, which makes private real estate funds such an attractive investment option for them. Pension plans make up 41% of Japanese investors in private real estate funds, while asset managers, banks and insurance companies form 14%, 12% and 12% respectively. South Korea exhibits a similar general trend – insurance companies (30%), pension funds (27%) and banks (24%) form the majority of unlisted real estate fund investors.

In terms of strategy, 69% of Far East-based investors in private real estate funds have a preference for the core strategy, making it the most popular fund type. Debt and core-plus funds are favoured by 54% and 50% respectively of the Far Eastern investor pool. Far East-headquartered investors are interested in development properties; 47% will consider opportunistic funds and 44% will look at value added opportunities. 

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