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Private Real Estate Fundraising In Asia – December 2013

by Ee Fai Kam

  • 04 Dec 2013
  • RE

Asia presents numerous opportunities for real estate investors; from skyscrapers and shopping malls in Hong Kong and Shanghai, to burgeoning residential developments in Malaysia and Thailand, and logistics warehouses in India and Japan, Asia has it all.  With China in the midst of an economic reform and Myanmar poised to put years of civil strife behind, many have seen it as a good time to invest in Asian properties. At present, there are 54 Asia-focused private real estate vehicles on the fundraising trail, targeting an aggregate capital of $21bn. These vehicles make up 12% of the world’s private real estate funds currently seeking capital from investors. The proportion of global aggregate capital targeted represented by these 54 funds is 13%.  

Fundraising for Asia-focused real estate funds has been challenging in the past five years; it fell to a lowest in 2009 when only 21 funds raised an aggregate capital of $5.2bn, from a high of 52 vehicles and $30bn the year before. Fundraising has struggled to reach the peak seen in 2008 since; the number of funds and aggregate capital raised has hovered around an average of 30 and $8bn respectively in the past three years. 2013 is proving encouraging; with less than a month to go, 21 Asia-focused real estate funds have already secured $10bn in commitments. 

Of the 21 funds that closed this year, 67% utilized a single strategy, while 33% were multi-strategy vehicles. This shows that investors find funds which invest with a narrow focus in terms of strategy more attractive than those with a diversified approach. The majority (62%) of these 21 funds incorporate the opportunistic strategy, while 33% invest in value added properties. The least attractive fund type is distressed, as only 5% of the fund pool utilizes this strategy. Core-plus, debt and core real estate funds make up 19%, 14% and 10% respectively of Asia-focused vehicles that held a final close in 2013.  

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