Institutional investors based in Asia-Pacific, particularly those in Greater China, have been making headlines with their direct property acquisitions. Just recently, China Investment Corporation acquired Investa Property Group’s portfolio of Australian offices for approximately $2.5bn, while Shin Kong Life Insurance was in the process of acquiring a London office building for £300mn. Besides direct investments, these prominent investors also have exposure to private real estate; Preqin’s Real Estate Online service tracks 376 institutions located in Asia-Pacific that actively invest in private real estate funds.
The top 25 Asia-Pacific institutional investors, by allocation to real estate, together hold $2.9tn in assets under management and have at least $175bn allocated to the real estate asset class. As seen in the chart above, the most numerous institutional investors based in Asia-Pacific are insurance companies, accounting for 10 of the top 25 private fund investors. Relaxed regulations for insurers may have contributed to this; the maximum permitted allocation to real estate for China-based insurance firms has increased from 20% to 30%, while Taiwan-based insurers have been allowed to invest in overseas property since May 2013.
In terms of investor location, seven of the top 25 institutions are based in Australia, followed by South Korea (6) and Japan (4). Taiwan, Singapore, China, Hong Kong and Malaysia make up the rest of the top 25.
More than half of the top 25 Asia-Pacific-based investors are seeking new private real estate fund commitments over the next year, with a clear preference for lower risk vehicles. Ninety percent of investors with future plans will target core vehicles, while 60% are targeting funds with a core-plus strategy. Additionally, these investors maintain a clear preference for investments in their domestic region: the majority (75%) of the top 25 institutions with future plans will target their home region in the year ahead, with 42% looking to North America-focused funds and 33% targeting European real estate in the next 12 months.