By the estimate of Nick Crockett, Jones Lang LaSalle’s head of corporate finance in Asia Pacific, there could be $500 million of private real estate fund investments in the region that, for various reasons, require offloading by their current owners over the coming 12 months. While not a giant number by today’s levels, it is nonetheless a meaningful amount to shift.
The good news is that, as of last Friday, Crockett’s firm is providing the Secondary Market Bulletin (SMB), part of a secondaries trading platform to which buyers and sellers of private real estate fund units can register their holdings along with their pricing and volume trading requirements. Brief descriptions of the fund interests will be circulated to a subscriber base – minus the pricing details – on a monthly basis. JLL hopes this will lead to some secondaries transactional matrimony in the region.
Until now, a third-party service like this has not been available for investors in Asia, says JLL, which will be pleased to have stolen a march on CBRE, its closest rival in global property services. Like JLL, Los Angeles-based CBRE has an established secondaries trading business in Europe and, while it is expected to introduce an Asia-Pacific equivalent some time in the future, that has yet to materialise.
Nonetheless, when it comes to comparing JLL’s effort in Asia with CBRE’s in Europe, we could be comparing an old-fashioned lonely hearts column with a modern internet dating site. By Crockett’s own admission, JLL isn’t promoting an equivalent to CBRE’s online PropertyMatch service, where investors benefit from ‘real time’ pricing and can more immediately engage in (and conclude) transactions. Indeed, there remains a certain opacity connected to a static bulletin, where keen sellers might wait up to a month before their goods can be offered in the shop window.
However, investors in Asia fund units should not expect any different right now. In the UK, where PropertyMatch is managed, fund units typically are valued at a far faster consistency than they are in Asia, are subject to well-respected indices and must adhere to stringent and disciplined valuation practices. The same cannot also be said about many of Asia’s markets.
Even with an Asian equivalent of PropertyMatch, could its data be relied on? One suspects investors of Asian fund units would need to do significant extra due diligence, perhaps some Australian property units aside.
Still, let’s not detract from JLL’s new matchmaking facility, which marks a significant step towards market sophistication for private real estate fund investors. It might resemble like a lonely hearts column but, given how illiquid many of the region’s private real estate funds are at present, that is most welcome. Asia isn’t ready for a more modern equivalent right now, so Internet dating in those parts can wait.