Blog

Investor Attitudes towards Asian Private Real Estate

by Forena Akthar

  • 14 Apr 2011
  • PE
  • RE

Over the last decade, both fund managers and investors in the private real estate market have shown great interest Asia-Pacific property, looking to take advantage of the region’s rapid economic growth. 2004 marked the beginning of significant growth in fundraising for Asia-focused private equity real estate, with 15 funds reaching a final close having raised an aggregate $3.3 billion. The annual aggregate fundraising total peaked in 2008, with $27.4 billion being raised by 45 funds. Since then, Asia-focused fundraising has struggled with only $5bn raised in 2009 and 2010. 

To gauge current investor sentiment towards Asian funds, Preqin undertook a series of extensive interviews with 76 institutional private real estate investors during February and March 2011. Institutions of varying size, type and geographic location were questioned in order to investigate investor attitudes towards Asian private real estate. 
57% of the institutions interviewed had previously invested in funds targeting Asia. 86% of respondents based in Asia and Rest of World had committed to Asian funds in the past, demonstrating a preference for markets closer to home. The proportion of participants based in North America and Europe that had invested in Asia-focused vehicles is almost identical, with 48% and 49% of respondents respectively having previously invested in Asian funds. 
55% of participants in this study made new commitments to private real estate funds in 2010. However, only 14% of those respondents committed to funds targeting the Asia-Pacific region in 2010. Respondents with historical Asian investments that did not commit to such vehicles in 2010 were asked when they last made an Asian fund commitment. 55% stated that their last commitment was made in 2008, 5% had not committed to Asian vehicles since 2006, and 20% made their last commitment in 2007.
68% of investors interviewed by Preqin have invested in Asia through managers headquartered in the region. This figure falls by seven percentage points when investors based in the Asia-Pacific region are excluded from the analysis. This illustrates that investors have confidence in Asian firms’ local expertise, and that institutions based in the US or Europe will not necessarily only use domestic managers, or highly established firms, to invest in Asia.
46% of respondents stated they had invested in Asia through pan-Asian vehicles. This suggests that institutions are not only interested in specific countries like China or India which are thought to have superior growth prospects, or developed Asian markets such as Japan, but seek exposure to the region as a whole. Only 22% had invested in Asia through global funds and this could be because institutions looking to invest in Asia prefer specialist Asian vehicles rather than those with a broader geographic focus.

Over the last decade, both fund managers and investors in the private real estate market have shown great interest Asia-Pacific property, looking to take advantage of the region’s rapid economic growth. 2004 marked the beginning of significant growth in fundraising for Asia-focused private equity real estate, with 15 funds reaching a final close having raised an aggregate $3.3 billion. The annual aggregate fundraising total peaked in 2008, with $27.4 billion being raised by 45 funds. Since then, Asia-focused fundraising has struggled with only $5bn raised in 2009 and 2010. 

To gauge current investor sentiment towards Asian funds, Preqin undertook a series of extensive interviews with 76 institutional private real estate investors during February and March 2011. Institutions of varying size, type and geographic location were questioned in order to investigate investor attitudes towards Asian private real estate. 

57% of the institutions interviewed had previously invested in funds targeting Asia. 86% of respondents based in Asia and Rest of World had committed to Asian funds in the past, demonstrating a preference for markets closer to home. The proportion of participants based in North America and Europe that had invested in Asia-focused vehicles is almost identical, with 48% and 49% of respondents respectively having previously invested in Asian funds. 

55% of participants in this study made new commitments to private real estate funds in 2010. However, only 14% of those respondents committed to funds targeting the Asia-Pacific region in 2010. Respondents with historical Asian investments that did not commit to such vehicles in 2010 were asked when they last made an Asian fund commitment. 55% stated that their last commitment was made in 2008, 5% had not committed to Asian vehicles since 2006, and 20% made their last commitment in 2007.

68% of investors interviewed by Preqin have invested in Asia through managers headquartered in the region. This figure falls by seven percentage points when investors based in the Asia-Pacific region are excluded from the analysis. This illustrates that investors have confidence in Asian firms’ local expertise, and that institutions based in the US or Europe will not necessarily only use domestic managers, or highly established firms, to invest in Asia.

46% of respondents stated they had invested in Asia through pan-Asian vehicles. This suggests that institutions are not only interested in specific countries like China or India which are thought to have superior growth prospects, or developed Asian markets such as Japan, but seek exposure to the region as a whole. Only 22% had invested in Asia through global funds and this could be because institutions looking to invest in Asia prefer specialist Asian vehicles rather than those with a broader geographic focus.

 

Continue browsing industry reports, publications, conferences, blogs and more on Preqin Insights