Blog

Private Real Estate Investors Targeting Australasia – March 2015

by Jaren Loke

  • 16 Mar 2015
  • RE

While direct real estate investments are often more prominent and widely reported in the industry, private real estate funds remain a more accessible route to market for many institutional investors, and hence the preferred avenue for property investments in Australasia. Of the private real estate investors with a geographical preference for Australasian investment, only 48% invest directly. 

Preqin’s Real Estate Online service tracks 158 private real estate investors with a preference for investing in Australasia, representing at least $361bn of capital allocated to the real estate asset class. The majority (63%) of these investors are Australasia-based. 

In terms of strategy, an overwhelming 84% of these investors utilize core funds, with core-plus funds targeted by 51% of investors. Given that the most numerous investor type in this group are superannuation schemes (46%), which typically have relatively conservative investment appetites, it is unsurprising that the top two strategies preferred are lower down the risk/return spectrum. 

Out of the pool of 158 unlisted property fund investors interested in Australasia, the median allocation to real estate is 8.2%. One prominent Australasia-based investor that invests in its home region is QIC, an Australia-based asset manager with over AUD 77bn in assets under management (AUM). The investor pursues a diversified set of strategies and has a 15.5% allocation to property. 

An alternative method of gaining access to real estate for private real estate investors is through co-investments. Traditionally, the ability to co-invest has gone hand in hand with the sophistication and size of an investor, due to the need for significant internal resources and knowledge. Australasia-based investors investing in their home region that are open to co-investments have average AUM of $26bn, whereas investors which are not open to co-investments have average AUM of $7bn. However, from March 2014 to March 2015, there was a 13% increase in the number of Australasia-based investors that were either investing or considering investing via co-investments, demonstrating that the number of investors seeking this alternative route to market is increasing as many institutions seek greater control over their investments. 

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