Asia Pacific sees only pickup in non-listed real estate investments in 2016

11 April 2017   Category: News, Asia, Global   By Asia Asset Management

Asia Pacific was the only region where institutional investors boosted investments in non-listed real estate vehicles last year, underscoring the attractiveness of its markets, new survey findings show.

Asia Pacific-focussed non-listed real estate vehicles drew US$22.9 billion in 2016, up from $18.4 billion the previous year, according to the Capital Raising Survey 2017. Overall, more than 80% of institutional investors surveyed invested a total of $128.4 billion in non-listed real estate vehicles, down 4.8% from 2015.

“Asia Pacific was the only region to see an increase of capital raised in comparison to 2015, which reflects the attractiveness of the markets in this region. All investors regardless of their domicile increased their exposure in Asia Pacific in 2016,” Amélie Delaunay, director of research and professional standards at the Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV), says in a statement last week (April 6).

Hong Kong-based ANREV conducted the annual survey jointly with its sister organisation, the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), and the National Council of Real Estate Investment Fiduciaries (NCREIF) in the US.

Europe remained the largest target market of institutional investors, attracting $59.6 billion or 46.5% of total capital raised in 2016. North American-focussed vehicles drew $33.3 billion or 26%, and 17.8% was raised for vehicles with Asia Pacific strategies, according to the statement.

More than half of the total capital raised for Asia Pacific strategies – $11.7 billion or 51.2% – was allocated to non-listed real estate funds in 2016. Joint ventures and club deals attracted the second largest share, at 28.8%, followed by separate accounts investing directly into real estate, at 13.3%.

In terms of investment style, core funds in Asia Pacific attracted 50% of capital raised, with opportunity-style funds and value-added funds making up the other 50%.

Almost two-thirds, or 61.4%, of capital raised was for single country funds versus 38.6% for multi-country funds, in line with findings from the 2015 survey. China attracted the largest share of equity raised for single country funds at 37.6%, displacing Australia which fell to second spot with 30.7%. Singapore and Japan were other big draws.  

Pension funds remained the dominant source of capital in Asia Pacific, accounting for 43.2% of total capital raised, up from 33.4% in 2015. However, the share of sovereign wealth funds dropped to 11.9% from 20.2%.

Asia Pacific fund managers showed strong home-bias behaviour with over 90% of funds allocated within their own region, and most of the balance going to Europe and North America, the survey found.