Investors remain committed to Asian non-listed real estate funds, although they have put short term allocations on hold, according to the latest research from INREV in co-operation with AREA and PREA.
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Japan offices proved most appealing among fund managers, followed by China residential.
The results of Investment Intentions Asia 2009 show that at 50% twice as many investors intend to increase allocations to Asian non-listed real estate funds in the medium term (three to five years) versus 24% in the short term (one to two years).
"Investors' continued commitment to Asian non-listed real estate funds demonstrates their added value in investment portfolios. The short-term pause in allocations totally reflects the current market circumstances where investors are concentrating on their existing investments. These results are in line with INREV's Investment Intentions Europe Survey, published at the beginning of this year," said Lisette van Doorn, INREV CEO.
The survey results also highlight the reasons why investors will remain committed to Asian non-listed real estate funds in the long term. Access to expert management was the most important reason to invest by investors, fund managers and fund of funds managers. Investors also highlight the importance of access to new markets and sectors.
"The survey shows that the underlying benefits of non-listed property funds are clearly recognised by investors. This will support the sector's development in the longer term. AREA also recognizes the obstacles and our initiatives will provide improved transparency in the market and support understanding of the issues facing the sector during these difficult conditions," said Nick Loup, Co-Director of AREA and Managing Director of Grosvenor Asia Pacific.
Respondents say the main challenges when investing in non-listed property funds in Asia were market conditions and the lack of transparency.
The more optimistic medium-term outlook by investors also aligns with respondents' views that the Asian real estate markets will start to recover in 2010. Investors and fund managers were most optimistic about a recovery starting in 2010 at 67% and 72% respectively. This compares to majority of fund of funds managers at 50% who expected recovery to begin in 2011. A more pessimistic outlook from fund of funds managers may be due to their tendency to invest with higher risk/return strategies in the region.
China, Australia and Japan featured in eight of the top 10 location and sector pairings preferences of survey respondents. China residential and retail investments led the way for investors, while China retail, Australian offices and Japan offices were the focus of fund of funds managers. Japan offices also proved most appealing among fund managers, followed by China residential.
The survey provides a guide to the expected trends of participants in the Asian non-listed real estate funds industry over the coming year. It was carried out with AREA, the Asian Non-Listed Real Estate Association, and for the first time, PREA, the Pension Real Estate Association (PREA) in the United States. The sur
