Asia-Pacific investors the biggest source of funds for real estate investment in 2022
Chelsea Ong
ASIA-PACIFIC investors raised US$54.8 billion in new capital in 2022 to be ploughed into real estate, 6 per cent more than the year before, a survey of investment managers has found.
The region now accounts for the biggest source of funds destined for real estate investment; North American and European capital drew away from the sector in 2022.
Capital raised from Asia-Pacific real estate investors now accounts for 35 per cent of capital raised globally.
The poll was carried out by Anrev (the Asian Association for Investors in Non-Listed Real Estate Vehicles), its European counterpart Inrev and the National Council of Real Estate Investment Fiduciaries (NCREIF).
Anrev noted that capital raised from European investors in 2022 plunged 43 per cent year on year from US$82 billion. “This may be attributed to European investors with real estate allocation above targets reeling from the denominator effect, as other asset classes fell further than real estate during 2022,” it said. (The denominator effect is a fall in value of a portion of a portfolio which pulls down the overall value of the portfolio.)
Nonetheless, although global capital raising activity fell 8 per cent from the US$288 billion raised in 2021, 83 per cent of the 116 investment managers surveyed said they raised capital in 2022.
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“This year’s capital raising survey affirms real estate as an important asset class for investors, and importantly, Asia-Pacific investors as the key source of global capital,” said Anrev’s senior director of research and professional standards Amelie Delaunay.
Non-listed real estate funds attracted the most capital in the region; 49 per cent of regional capital was allocated to the segment.
The poll found a shift towards investments in joint ventures and club deals by Apac investors; 25 per cent of regional capital was allocated to those two areas, up from 9 per cent in 2021. This might point to investors favouring more control and strategy involvement for Apac investments, Anrev said.
Riskier investment style accounted for 55 per cent of capital raised by non-listed real estate funds in Apac – 20 per cent for opportunity funds and 35 per cent by value-added funds. Core strategies attracted the remaining 45 per cent of capital raised for non-listed real estate funds in the region.
Single-country strategies also attracted more capital from Apac investors, double that raised by multi-country vehicles.
Investors also tended to prefer the industrial and logistics sector – 69 per cent of capital within single-sector strategies was raised for vehicles with that strategy, of which US$13 billion was raised mainly under non-listed funds and joint ventures and club deals.
However, the capital raised in 2022 outpaced capital deployment. The share of capital raised and subsequently invested fell to 26 per cent from 53 per cent in 2021.
“This implies a heightened level of dry powder on the side lines that is available for deployment in challenging market conditions,” Anrev said.
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