The APAC private equity real estate (PERE) market shows little hope of a turnaround

The APAC PERE market has yet to recover to pre-pandemic levels. Both deal count and aggregate deal value show few signs of an early turnaround, with the market likely yet to bottom out. 

The proportion of deals by sector demonstrates current trends in the market. Retail’s aggregate deal value jumped from 4% to 36% over the past year in APAC, and well-performing assets in prime locations are likely to remain successful. Office spaces have accounted for a significant portion of the deals over the past five years, despite their declining share (from 42% of aggregate capital in 2020, 35% in 2021, and 26% in 2022). The Preqin Quarterly Update: Real Estate Q4 2022 highlighted a similar global decline in the proportion of office deals. What’s more, although residential real estate has become the most active sector globally, APAC’s residential aggregate deal value dropped from 16% in 2021 to 6% in 2022. 

Despite challenges in the market, 2022 marked the first year of growth in aggregate deal value since 2019. This growth in PERE deal value may continue, with more opportunities emerging if the perceived overvaluation of real estate softens. Other opportunities include China’s post-pandemic reopening and the possible demand for updated smart office buildings in the region. 

Download Trending Data: PERE deals in APAC (2017 – 2022) for a closer look at the data.