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Private Real Estate Funds Investing in Asia-Pacific – March 2013

by Ee Fai Kam

  • 13 Mar 2013
  • RE

The varying rates of growth in Asia-Pacific have created numerous real estate investment opportunities, such as core-type office assets in the twin financial centres of Singapore and Shanghai, opportunistic residential apartments in Jakarta, Bangkok and Kuala Lumpur, and logistics centres in Japan and Australia. As a result of this, there has been a growth in investor interest in the Asia-Pacific property market.

At present, there are 59 private real estate funds on the road that will invest in the Asia-Pacific region, which are collectively aiming to raise an aggregate $29bn. These funds employ a variety of strategies, with the most common being opportunistic. Seventy-three percent of these 59 funds are pure or hybrid opportunistic vehicles, while 30% employ the value added strategy. Funds which invest in distressed assets represent 18% of the pool, core-plus and debt strategies each account for 14% of these vehicles, while 13% take a core approach to investing.

With respect to property sector, 42% of private real estate funds currently on the road with an interest in Asia-Pacific will invest in residential assets, including apartments and single-family dwellings. The second most common asset type is office buildings, with 28% of funds having a preference for them. Twenty-two percent of private real estate funds operating in the region, attracted by the growing population of middle class particularly in China, are targeting retail properties. Industrial assets are sought by 20% of funds, while the commercial sector is targeted by 10% of funds.

Currently, the largest real estate fund in market with an allocation to Asia-Pacific is Brookfield Strategic Real Estate Partners, which is managed by US-based firm, Brookfield Asset Management. Brookfield Strategic Real Estate Partners is aiming to raise $3.5bn in total commitments and has already secured 60% of its target so far. The fund takes a multi-continental approach; other than Australia, it also invests in countries such as Brazil and the US. The two largest private real estate funds on the road managed by an Asia-Pacific-based manager are Secured Capital Real Estate Partners V and Alpha Asia Macro Trends Fund II, which are both targeting $1bn and invest exclusively in Asia-Pacific properties. Secured Capital Real Estate Partners V, managed by Japanese manager, Secured Capital Japan, invests in opportunistic, distressed and debt opportunities in Australia, mainland China, Hong Kong, Japan and South Korea. Alpha Asia Macro Trends Fund II, a Singapore-based diversified fund, makes core-plus and value added investments in Chinese, Indian, Japan, Korean, Singaporean, Taiwanese and Vietnamese assets.

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