Rising appetite for Asian real estate
06 September 2013
By Asia Asset Management
M&G Real Estate has seen a marked increase in investor appetite for Asian real estate in 2013, with new third party investors committing US$112 million to its core Asia real estate strategy since the start of the year. The real estate fund management arm of M&G Investments says that smaller pension schemes and insurance companies are increasing allocations and committing new capital to the asset class.
M&G Real Estate’s core Asian real estate strategy has assets under management of US$1.2 billion (as at June 30, 2013). All of the new investors in the strategy are from Europe and the Americas.
“We’re seeing increasing interest in core Asian real estate from institutional investors in Asia and internationally. Investors see value in the attractive risk-adjusted returns, sustainable yield, higher growth and defensive qualities that a well-constructed Asian core real estate portfolio can offer. Large pension funds have invested in Asian real estate for some years and we’re now seeing growing interest from smaller pension schemes and insurance companies wanting to increase the diversity of their real estate allocations and grow their capital by investing in mature Asian markets,” said Scott Girard, CEO of M&G Real Estate Asia.
The core Asia real estate strategy managed by Erle Spratt invests in high quality office, retail and industrial real estate assets across the Asia Pacific region. The strategy is aimed at institutional investors who want a relatively defensive exposure to enhance the diversification of their real estate portfolios within a strategy that is low risk and income focused. M&G Real Estate’s core Asia portfolio comprises seven assets across Hong Kong, Singapore, Korea and Australia. The assets offer attractive yields, embedded growth and a consistent local currency total return.
Mr. Spratt added: “Our real estate portfolio has low vacancy rates and steady fixed income growth. We constantly seek to improve recurring income on our real estate assets via proactive asset management and we’re assessing investment opportunities in Hong Kong, Japan and South Korea. A growing, sustainable income stream from a diversified property portfolio in attractive markets provides a strong basis to provide reliable returns to our investors. Ultimately we want to strengthen our position as the leading core property strategy in Asia.”
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