The opportunities in Asian real estate secondaries market are expected to grow as more European and North American investors are pivoting back to invest in their home markets.
Singapore-headquartered real estate secondaries firm Aquilius Investment Partners is one the few dedicated real estate secondaries players in Asia ready to capitalize on the growing opportunities in the region. Bastian Wolff, founding partner at AIP, has been seeing more LP-led transactions in the region compared to the US and Europe.
“A lot of European and North American investors are looking to dispose of assets that are far away from them, which in many cases is Asia,” says Wolff. “They are rotating out of Asia because they see better opportunities in their home markets during these times of uncertainty. Some of them want to change their strategy to allocate more to private credit, for instance. There are various reasons for the shift.”
Christian Keiber, founding partner at AIP, also notes that many global institutional investors are overallocated to private markets due to the denominator effect, and they have to rebalance their portfolios. With both factors in mind, the pair has seen more willingness from investors to transact in the secondaries market.
Meanwhile, there are limited newcomers to the Asia market compared to the more competitive markets in the US and Europe as the former has a higher barrier to entry. “The markets in the US and Europe are very efficient where investors get good access to information. It is a market based heavily on desktop analysis. But the Asia market doesn’t work like that. There is this huge level of disintermediation. The vast majority of the volume we see is unbrokered and it takes a lot of time to find and cultivate the deals. But when you do, these deals can lead to very attractive situations,” Keiber explains.
AIP fully deployed its debut real estate-focused secondaries fund AIP Secondary Fund I into approximately a dozen deals shortly after the vehicle’s final close in April 2023. The firm raised $400 million for the main fund and an additional $200 million of managed accounts for co-investments. “We traded more intensely towards the second half of this year and we have been very busy looking for upcoming opportunities as well,” says Wolff.
He notes Australia is currently one of the most attractive markets and will likely remain popular next year. “You see some of the open-end funds which have large redemption queues that need to get worked through. There are various ways for GPs to address it including limiting distributions, getting fresh equity, or selling assets. But these funds are so big that they need to be addressed in more than one way. Secondaries funds could come in and provide solutions in those scenarios.”
India logistics is also going to be a big theme for the firm in 2024. “We have done quite a bit in that sector this year and a lot of capital is flowing into that market. While more investors are looking to buy core assets in Indian logistics, there is a real scarcity for the product. We saw cap rates come down this year and expect them to compress further in 2024,” Wolff says.
With private markets investments in Asia continuing to grow, the pair expects the secondaries market to likewise expand in the region. “There is a huge dispersion between the opportunity set and the amount of dry powder available. While Asia represents about a quarter of the global private market AUM, only 3 percent of the global dry powder for secondaries goes into the region. It is hugely undercapitalized,” Wolff says.
If you do not receive this within five minutes, please try to sign in again. If the problem persists, please email: 
