Non-listed private equity real estate funds with a core investing strategy in Asia Pacific recorded returns of 3.3 percent in the second quarter of 2015, the highest levels seen since 2011, according to the Asian Association for Investors in Non-Listed Real Estate Vehicles’ (ANREV) Quarterly Index report.
The 31 core funds out of the total of 96 private equity real estate funds analyzed for the index recorded higher returns than value-add and opportunity funds in the region, which clocked returns of 2.2 percent and 0.7 percent respectively, in the last quarter. The 3.3 percent average return is also higher than the 2.8 percent return of core funds in the first quarter of 2015 and 2.9 percent return in the second quarter of 2014.
The growing momentum for real estate investing in Australia via core strategies is the single largest driver of the improved performance of the low risk/return funds, according to Amelie Delaunay, director of Research and Professional Standards, ANREV.
According to the index, the number of funds focused specifically on investing in Australia has been steadily increasing. In terms of the gross asset value of the core funds analyzed, almost 80 percent was allocated to Australia in the last quarter. Singapore came next with an allocation of 8.7 percent.
For all strategies combined, non-listed real estate funds in Asia Pacific recorded returns of 2.6 percent, higher than the previous quarter.
“Non-listed funds in Asia showed a steady performance for the second quarter of 2015 and passed the hurdle of a 10 percent total return on a one-year rolling basis for the first time in four years,” said Delaunay.
Along with the Australia-focused core funds, the performance of Japan’s opportunistic and value-added funds contributed to the high returns. Japan-focused funds clocked 10.6 percent returns in the quarter, significantly up from the 4.6 percent in the first quarter of 2015, attributed largely to property revaluations in Japan and the increasing number of funds being liquidated in the country.
While fund returns in Asia Pacific were higher than the 2.61 returns recorded by the European non-listed real estate funds, they fell short of the 3.88 percent returns of the US funds, according to the Global Real Estate Fund Index, created by ANREV, its sister organization INREV and NCREIF.