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State of Play: Current trends in APAC private real estate funds

30 Oct 2023

The global real estate market continues to grow and the same is true within Asia-Pacific (APAC). When it comes to global real estate trends, however, there is significant variance across the APAC region – and, as reflected in an insightful new report co-produced by IQ-EQ, Goodwin and KPMG, this is directly impacting APAC-focused private real estate funds.

The diverse nature of the APAC region means although it’s subject to the same macro trends experienced across the globe, the impact of these trends vary from market-to-market. With differing economic, demographic and cultural factors at play, strategies play out very differently across neighbouring markets.

For example, while Australia and Japan are each providing opportunities in the residential sector, either in build-to-rent or multi-family residential, the broader ‘living’ sector is a non-starter in other APAC markets. Real estate credit plays well in Australia and may, in time, gain some traction elsewhere in the region, but the stresses felt by conventional banks in Western markets are not as widespread in APAC and so it may take longer for the funding gaps to emerge. And while the resilience of the region’s office markets is patchy overall, countries such as Japan and Korea seem to have rejected remote working as a concept and are seeing close to 100% office occupancy in their major cities.

In terms of how such diversity plays out for private real estate funds specifically, on the one hand, the APAC market(s) can be hard to understand, capital-raising can be difficult and in the absence of any material re-pricing it seems likely that investors from North America and Europe may focus their attentions closer to home in the short term. On the other hand, however, there are new sources of capital and APAC managers are on track to raise more money from the Middle East and from family offices and high-net-worth individuals than ever before.

Interestingly, according to the majority of the 40+ industry professionals we interviewed for our report, APAC is the most under-allocated-to region globally, with nearly half of them expecting Asian investors to make up the largest capital base for their APAC mandates. It was clear that GPs will have to work harder to raise capital and take advantage of the real estate opportunities across the region and we’d expect to see fewer pan-regional funds and more country- and sector-specific mandates. The APAC market is never dull, and all of those we spoke to were optimistic about its long-term resilience and growth prospects.

Harnessing the responses collected from a variety of APAC-focused real estate GPs and LPs by myself, Goodwin’s Matthew Nortcliff and KPMG’s Anulekha Samant throughout August 2023, the following report provides timely and valuable insights into the current landscape of the APAC private real estate funds industry and offers a comprehensive analysis of the region’s key trends and market dynamics, helping investors and industry professionals to make informed decisions.

It has been a real pleasure collaborating with Goodwin and KPMG on this project, and our hope is that this publication proves useful and thought-provoking, both for those already active in the APAC region and for those whose heads may be turning to APAC for the first time.

Download the whitepaper here

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IQ-EQ has a strong foothold within Asia’s real estate market, working on seven of the 10 biggest APAC-focused real estate funds since 2019. Globally, we offer a comprehensive suite of services designed to guide fund managers through the ever-evolving private real estate funds landscape. To find out more, please don’t hesitate to contact me:

Working with IQ-EQ has been seamless – you and your team understand our business, advise us appropriately, and handle your side of our collective partnership so that we can focus on making good investment decisions. Evan Gibson SVP, Merchants Capital

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