According to Preqin’s data, there has been a 36% growth in the number of institutions located in Greater China with an interest in private real estate funds as compared to one year ago. This suggests a growing appetite for unlisted vehicles among investors based in the region. Indeed, institutional investors from Greater China have been exhibiting substantial appetite for overseas property. Just this week, Taiwan’s Cathay Life Insurance purchased Woolgate Exchange, a London office building. In the month alone, Gingko Tree Investment, the investment arm of China’s sovereign wealth fund, entered a joint venture with The Crown Estate to purchase a shopping center in the UK. While these large institutions have the financial means to invest directly in property, smaller institutional investors may look to access the asset class via private funds. This is also a possible reason behind the noteworthy 36% increase in the number of Greater China-based institutions with an interest in unlisted vehicles.
Preqin’s Real Estate Online currently tracks 64 institutional investors in Greater China that are active or are considering private real estate fund investments; these firms make up 19% of the Asia-Pacific universe. Collectively, these 64 Greater China-based institutions hold approximately $4tn in assets under management, with at least $73bn allocated to real estate. Chinese investors form the largest proportion (61%) of institutions located in Greater China. Thirty-one percent of the investor pool with an interest in private funds is located in Hong Kong, while the remaining 8% hail from Taiwan.
Corporate investors make up the majority (28%) of Greater China-based investors with an interest in private real estate funds. Insurance companies are the second largest (16%) institutional type while asset managers, family offices and investment companies each account for 9% of the investor pool.
With regard to location preference, investors located in Greater China have a strong home bias with a significant 76% choosing to invest in their home region. Interestingly, regions such as Asia, Europe and North America are equally favored by institutions interested in private vehicles – each region is preferred by 20% of the corpus.
Opportunistic vehicles are highly sought after by Greater China-based institutions; an overwhelming 80% of investors have a preference for this fund type. Funds employing value added strategies are favored by 68% of institutions located in the region while 34% of the investor pool with an interest in private funds has a preference for core vehicles. Twenty-five percent of investors located in Greater China will be inclined to invest in debt funds while 18% will invest in core-plus vehicles.