Asian PE Real Estate Funds Outperform
Wednesday, December 08, 2010

Research conducted for the latest edition of Preqin’s Real Estate Spotlight publication reveals that the performance of Asia and Rest of World-focused private equity real estate funds has been excellent, with close to half of all the funds that Preqin holds data for that focus on this area (53) appearing in the top 25% of all funds worldwide for their respective vintage years.

According to the Preqin Global Performance Benchmarks, 46% of Asian-focused private equity real estate funds appear within the top quartile, with just 8% of such funds in the bottom quartile.

However, Preqin's figures show that the Asian private equity real estate market was not immune to the impact of the financial crisis, and the region’s share of the total funds raised globally declined from 19.4% in 2008 to 10.6% and 8.8% in 2009 and 2010 to date respectively. There was also a significant decline in the amount of capital committed to funds in the region by foreign investors in 2009; 25% of capital raised was committed by such investors, compared to 48% in 2008. This figure has since risen again, with the proportion of commitments made by foreign investors during 2010 to date standing at 55%, says Preqin.

The proportion of funds raised by foreign managers declined in 2009, from 47% in 2008 to 25%. The figure remains the same in 2010 to date with increasing numbers of domestic managers raising funds. But the research suggests that the fundraising downturn is unlikely to last, with 45% of respondents to the latest Preqin survey stating an interest in Asia and Rest of World-focused vehicles.

“Despite the recent dip in capital raised for Asia-focused funds, these vehicles have performed in a more consistent manner than their North American and European equivalents. If this trend continues once the property markets recover, then investors will quickly recognize the benefits of committing to Asian funds," commented Andrew Moylan, Manager of Real Estate Data.

"The increasing experience being gained by domestic fund managers, as well the increased sophistication of institutional investors in the region, indicates that Asian funds can begin to command an even more prominent position within the global fundraising market. This, combined with the renewed enthusiasm of foreign managers and investors for the region, means a growing supply of capital can be expected to enter the Asian fund industry in the near future," Moylan added.