Real estate fund managers based in the Asia-Pacific region, along with fund managers located elsewhere in the world, have endured a drop in the total number of funds and aggregate capital raised since the global financial crisis of 2008. From a peak of 46 funds closed in 2007 securing an aggregate $15bn in capital commitments, fundraising by Asia-Pacific-based real estate managers reached a record low in 2009 when only 19 vehicles closed in the year securing a total $4.3bn. However, the fundraising environment in the Asia-Pacific region appears to be picking up. Twenty-eight private real estate funds closed in 2012 managed by Asia-Pacific-based managers raised a total of $6.5 billion. So far during 2013, five private real estate funds have held a final close and raised a collective $578mn.
At present, there are 41 private real estate funds in market, targeting an aggregate $13bn. Of these, 11 have already held a first close, while seven have gone on to a second close; collectively these 18 vehicles have secured $3.2bin in capital commitments. The majority (58%) of these 41 vehicles are single-strategy funds utilizing either a core, debt, opportunistic or value added strategy, while the remaining 42% incorporate a mix of at least two strategies.
All 41 funds in market invest only within the Asia-Pacific region; 85% invest solely in one country while the remaining 15% take a multi-country approach. With strong population growth in much of Asia, residential properties rank highest on the investment agenda of Asia-Pacific-based fund managers - 58% of private real estate funds in market target residential assets. With 40% of the 41 funds investing in them, commercial assets form the second-most common property type favoured by Asia-Pacific managers. Thirty-five percent of Asia-Pacific-based private real estate funds invest in offices and the same percentage target retail malls or shopping centers. The remaining property types which are of interest to the 41 funds in market include industrial, logistics, warehouse, hotel, hospitality and car park assets.
The two largest funds in the market are Alpha Asia Macro Trends Fund II and Secured Capital Real Estate Partners V; each vehicle is targeting $1bn. Both funds invest in a range of properties, and share similar geographic preferences of China, Hong Kong, South Korea and the wider Asia region. Two vehicles which may hold a final close soon are CITIC Capital China Retail Properties Investment Fund and Phoenix Asia Real Estate Investments V. Each fund is aiming to secure $600mn and have so far raised more than two-thirds of their targets.