Understandably when we look at global capital flows, there is a heavy focus on the activity that takes place within North America and Europe. While these developed regions represent the majority of both fundraising and deal activity globally – and house the highest concentrations of institutional real estate investors – the Asian market has begun to seep into the collective consciousness of GPs and LPs alike. Hit by a retraction in risk appetite in the aftermath of the Global Financial Crisis (GFC), Asia-focused real estate fundraising has since failed to recover to its pre-crisis highs as international managers pulled out to focus on raising funds closer to home.
However, this gap created opportunities for local players to come to the fore, and we have now reached a stage where, for most post-crisis years, the majority of capital raised for Asia-focused funds is managed by Asia-headquartered firms. Despite the lack of growth in the amount of capital secured year on year, the deal market has experienced significant growth, with 2017 representing a new record for investment activity. With Asian economies expanding at a faster rate than their North American or European counterparts, alongside increasing urbanization and positive demographic trends, there are significant opportunities for further private investment. However, while presenting investors with significant diversification and potential for high returns, it remains a challenge to convince institutions that the risks are worth the reward, particularly when concerns arising from high pricing are rearing their head in the Asian market as well.
Where has the epicentre of Asian deal flow been? Who has had the most success in raising capital? What are the challenges facing participants in the Asian market? Which institutions are active in the space today and where will activity likely be over 2018? Where are the potential opportunities for your firm? These are the questions that we have attempted to answer in our most in-depth analysis of the Asian real estate market.
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