Friday 29 Mar 2024
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Investors’ allocation to global real estate will continue to grow in 2015, according to a survey jointly published by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) and the Pension Real Estate Association (PREA).

The annual survey, now in its eighth year, attracted a record number of responses — 337 in total — from investors, fund managers and fund of fund managers. A total of 82 respondents were from Asia-Pacific.

An estimated US$58.5 billion (RM211.4 billion) worth of capital is set to flow into global real estate. Some 60% of Asian investors say they expect to increase their global real estate portfolio over the next two years. The main reason, they say, is the diversification benefits of a multi-asset portfolio, followed by seeking enhanced returns.

Asia-Pacific investors are targeting a significant increase in their allocation to real estate to 11.0% from 9.8%.

The current environment of low interest rates and low bond yields has highlighted the attractiveness of real estate as an asset class, especially for those seeking relative value when comparing real estate with low fixed income and volatile stock markets.

According to the survey, the most popular investment destination in Asia-Pacific is Tokyo, followed by Sydney and tier-one cities in China (Beijing, Shanghai, Guangzhou and Shenzhen), and Melbourne.

By sector, the office market is the preferred investment sector, while industrial and logistics rank second for investors. Some 45% of investors expect to invest in the Tokyo office market this year.

South Korea has become a more attractive market for investors, with the office sector ranked as the sixth most preferred destination/sector.

“In 2015, 40% of global investors still expect to increase their allocation for non-listed real estate funds in Asia-Pacific, mainly from European and North American investors.

“Global cross-border capital flows are set to benefit from increased allocations by Asia-Pacific domiciled investors, who tend to focus on a more direct approach via joint ventures and club deals or direct real estate investments,” Amelie Delaunay, director of research and professional standards at ANREV, said in a statement.

However, as seen since 2013, investors expect to increase their allocations for joint ventures and club deals. This trend in part is driven by investors who want to exercise more control over their investments.

In terms of fund style, in 2015, for the first time investors have shown equal interest in core and value-added funds. Compared with 2014, there is a rise in the number of investors opting for core funds. This is an indication that investors are taking a lower risk investment option.

Investors mentioned access to new markets as the main benefit for investing in non-listed real estate funds in Asia-Pacific, displacing access to expert management as the leading reason.

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