Preqin currently tracks 808 institutional investors which are active or are considering investing in Asia-focused private real estate funds. Collectively, these investors hold $24.4tn in assets under management (AUM). These 808 investors have exposure to $321bn of private real estate funds.
Pension funds represent the bulk of institutional investors with a preference for Asia-based vehicles. Public pension funds form the largest proportion (22%) of the investor pool, while private sector pension funds make up the second largest group at 17%. Foundations (13%), endowment plans (8%) and insurance companies (8%) form the remaining investors in Asia-focused private real estate funds.
In terms of geographical location, US institutions make up the majority (49%) of investors in private real estate funds with an Asian focus. This is followed, with a significant decrease, by those based in the UK (7%), Netherlands (4%), Australia (4%) and South Korea (4%). From this data, it is evident that US investors, especially US pension funds, have a huge appetite for funds investing in Asia. A recent example of this is New York State Teachers’ Retirement System‘s $75mn commitment to Gateway Real Estate Fund IV.
Opportunistic funds are most appealing to institutional investors, with 77% of the investor pool having a preference for this strategy. Seventy percent of institutions view value added funds as attractive, while 62% are in favour of funds employing core strategies. Debt funds are preferred by 47% of investors, while 46% favour core-plus strategies. Distressed funds are the least preferred, with only 40% of the investor pool opting for such funds.