The Asia-Pacific region and other developing nations are becoming larger players in the industrial real estate landscape.
From 2010 to 2013, the number of industrial-focused funds closed increased by 75% and the capital raised increased from $2.1bn to $4.8bn globally, demonstrating an increased level of investor confidence in line with economic recovery. This has continued into 2014, with $3bn raised to date.
North America and Asia were the joint primary target locations for industrial-focused private real estate funds closed from 2010 and onwards. As the chart below shows, Asia-focused vehicles raised a total of $4.7bn through 17 vehicles, and managers targeting North America closed the same number of funds but with $5.4bn committed. In the five years prior to 2008, North America accounted for 34% ($3.4bn) of global aggregate capital raised for industrial-focused real estate funds, compared to Asia’s 28% ($2.7bn) share of the market. These findings highlight an increasingly established Asian market for industrial real estate. The last five years have also seen Latin America raise a total $2.1bn for industrial real estate, surpassing Europe by $680mn in capital raised.
Strategically, the industrial private real estate market is weighted more towards value added and opportunistic vehicles, with 34% and 30% of funds closed in the last five years respectively adopting these strategies, which have collectively raised two-thirds of the total capital for the sector in this time period. Core funds have accounted for 24% of funds closed in the last five years and 25% of capital raised in the same time period.
Preqin’s Real Estate Online shows that there are 11 private real estate funds currently in market focused exclusively on the industrial sector, collectively targeting $3.3bn in investor capital. Of the 11 funds currently in market, eight are pursuing value added strategies and the remaining three are primarily core, of which five are targeting North America, three are focusing on Asia and three are concentrating on Europe.