The year 2021 witnessed an exceptional recovery in real estate capital raising in the wake of the turbulence of the covid-19 pandemic, signaling a strong appetite for continuing investment in the non-listed real estate asset class throughout the Asia-Pacific region and worldwide.
Capital raising activity reached a record-breaking high in 2021, with at least $288 billion raised globally for non-listed real estate, according to the ANREV/INREV/NCREIF Capital Raising Survey 2022.
Capital raised specifically for Asia-Pacific strategies also reached a record level of $38.9 billion, an amazing 49 percent increase over the previous year. The survey reveals that, within the universe of real estate investment strategies, non-listed funds continue to
attract the majority of the capital, globally and within the Asia-Pacific region.
It reveals an increase of 91 percent over the $151 billion of capital raised in the preceding year, and this upward trend is expected to continue in the near term.
Indeed, 76 percent of survey respondents anticipate an increase in capital raising activity over the next two years. This is despite an abundance of dry powder in the market.
The share of capital raised but not yet invested was higher in 2021 than in the previous year, which implies some challenges globally in deploying that capital. It should be interesting to watch for any trend in investors moving up the risk curve in the region in an effort to get capital invested.
Most of the institutional investors surveyed confirmed their intentions to stand by their existing future investment plans for global real estate. According to the ANREV/INREV/PREA Investment Intentions Survey 2022, 62 percent of respondents reported that the covid-19 pandemic would not affect their investment plans for 2022 on a global level. Moreover, the investment intentions survey reveals that the Asia-Pacific region is the most attractive investment destination for investors that
expect to increase their allocations over the course of the next two years.
Signs of change
What is changing somewhat, however, is the allocation of capital among various real estate asset classes. For the first time in the history of the survey, the industrial and logistics sector shows up as the most preferred sector for investment in the Asia-Pacific region. This is not entirely surprising, considering the sector’s recent outstanding performance, as revealed by the ANREV index.
Capital raised for non-listed real estate globally in 2021
Capital raised for non-listed real estate in Asia-Pacific in 2021
Asia-Pacific is the most attractive investment destination for investors looking to increase allocations
More Asia-Pacific capital raised last year than the year before
The most preferred city/sector combination was Tokyo residential – also a first for the survey. Furthermore, the survey results indicate a noticeable shift toward core and value-add strategies, and a growing importance placed on ESG considerations (including net-zero carbon commitments and DE&I objectives) when investing in the region. These trends are laying the groundwork for some interesting developments in the Asia-Pacific real estate investment industry over the course of the coming years.
Globally, the real estate industry continues to grow at a significant pace, with real estate assets under management increasing by 14 percent in 2021 to a record high
of $4.7 trillion. In fact, global real estate AUM has more than doubled since 2015, according to the ANREV/INREV/NCREIF Fund Manager Survey 2022, another indicator of strong investor interest in the asset class.
In a sign of continuing concentration of capital, the total AUM of just the top 10 largest real estate managers exceeded $1.9 trillion, with the average top 10 fund manager’s AUM clocking in at a hefty $192.2 billion. However, the only Asia-Pacific-domiciled manager to appear in the rarefied air of the global top 10 is new entrant GLP, taking the number 10 position with $100 billion in real estate assets under management.
Ready for what comes next
The high and increasing level of transparency in non-listed real estate fund performance represents ever-more sophisticated market intelligence in the industry. And, with a deep sense of humility, I can add that it is also reflective of ANREV’s importance to investors and fund managers around the globe.
With the ongoing development of indices such as the Australia Core Open End Fund Monthly Index (ACOE) and the ANREV ODCE Index, covering the performance of pan-Asia core open-end diversified funds, the demand for useful indices continues to swell among ANREV members. And earlier this year, ANREV launched our Data Platform and Analysis Tool in order to not only give the industry the ability to more easily track non-listed fund performance in the Asia-Pacific region, but also to allow our members to slice and dice the underlying data to tailor our indices to their specific needs.
As the industry continues to increase in size, globalize and become more transparent and institutional, the need for increasingly sophisticated and versatile performance measurement tools will also continue to grow. ANREV and our global partners stand ready to continue providing our members with the tools they require for ever more complex analysis and evaluation of their investment programs.