Asia-Pacific is home to more than 270 institutional investors in private real estate funds. Collectively, they manage $13.2tn in total assets, of which a staggering 98% is contributed by the top 100 firms. The top 100 institutions by assets under management (AUM) have exposure of $206bn to the real estate asset class. At present, they have capital commitments of $20bn invested in private real estate funds. So who are these Asia-Pacific investors and in which countries are they based?
The majority (27%) of the top 100 Asia-Pacific investors in private real estate funds are insurance firms. This is followed by superannuation schemes (16%), banks (13%) and asset managers (12%). Sovereign wealth funds, pension funds, corporate investors, wealth managers and investment companies make up the rest of the investor pool.
Australian firms form the largest (27%) proportion of the top 100 private real estate fund investors in Asia-Pacific, while institutions from South Korea (17%), Japan (17%), China (10%) and Singapore (7%) make up the remaining four most popular regions where the investor pool is headquartered. It is hardly surprising to see Australia, South Korea, Japan and Singapore top the list as places where most of Asia-Pacific investors are based, because these are developed economies and early adopters of private real estate fund investments. Chinese firms, on the other hand, are generally younger investors in unlisted property vehicles. In fact, prior to September 2010, Chinese insurance firms were prohibited from having an exposure to private equity real estate funds. Chinese firms making up such a large proportion of the top 100 private real estate fund investors now is testament to how rapid Chinese investors have grown in sophistication over the past decade.
Core funds are most popular with the top 100 Asia-Pacific-based investors, with 75% of the investor pool having a preference for the strategy. Sixty-one percent of Asia-Pacific institutions will invest in opportunistic funds while 53% prefers value added vehicles. Funds employing the core-plus strategy are the fourth most favoured (52%) vehicle type of the Asia-Pacific investor pool, while debt (40%) and distressed (28%) funds are the least common.