Thomas Hirschvogel, regional head of APAC at Patrizia, expects the firm to strengthen its presence in Asia-Pacific amid strong anticipated capital flows from Asian investors back into the region.
This anticipated uptick in capital flows follows two of the firm’s major developments in the region: the establishment of its first direct real estate discretionary fund with an Asian institutional investor and the opening of a Singapore office.
“I think it’s a fairly evolutionary path that we are on in APAC. We started with the function of capital raising first and now we are on the investment management track,” said Hirschvogel. The firm began to expand its investment management capability into APAC with the acquisition of Tokyo-based real estate advisory and asset management firm Kenzo Capital Corporation in 2019.
With the Kenzo platform, Patrizia has decided to make Japan a central focus of its direct real estate investment activity in the region with a midterm growth ambition of 300 billion yen ($2.2 billion; €2.1 billion) in AUM by 2027.
The ambition was reflected in the formation of the firm’s 150 billion yen Japan discretionary real estate fund, which marked Patrizia’s first time partnering with an Asian investor to invest into APAC. The fund, announced last week, will target core-plus and value-add residential opportunities across the country.
Some of Patrizia’s APAC investors previously had been active in Europe but are now redirecting capital back to their home region, Hirschvogel said. One reason for this pivot is the weaker exchange rate of Asian currencies against the US dollar. It’s particularly the case with investors from Japan, hence the new fund’s focus on that market, he added.
“There’s also an interesting fact the Ukraine crisis is currently making Asian investors a bit wary of putting money into Europe, but they have less of a problem deploying money back into Asia,” he added.
‘A step change’
Wolfgang Egger, chief executive officer of Patrizia, said in a release that the partnership represents “a step change in our APAC growth story and Patrizia’s international investment activities.” He added the fund-of-one underscored the firm’s conviction to grow its Japanese platform against a backdrop of global economic challenges and demonstrated its ability to further expand its business in the region.
As the firm continues to broaden its investments into other commercial real estate sectors in Japan, Hirschvogel saw Australia as the natural “next step” in its real estate expansion. He noted the firm’s acquisition of Australian infrastructure manager Whitehelm Capital in February 2022 has given it exposure to the country already.
“On the real estate side, what we see is that there is a certain skill that we have acquired in Europe on the affordable housing side that we could transfer into Australia. So getting into affordable housing is one. And then the second part is sustainable housing,” he pointed out. PERE reported earlier this year that the firm launched a €500 million affordable residential-focused strategy fund in Europe with commitments from Danish pension investors AP Pension and PKA.
With the ambition of doubling its overall AUM in APAC by 2027, the firm also announced last week the opening of a new office in Singapore, which is responsible for fund management and fund services. The office will also support capital raising and product development in the region. Patrizia now has APAC offices in Singapore, Hong Kong, Tokyo, Seoul, Sydney, Canberra and Melbourne.
The opening of the Singapore office will enable the firm to stay closer to its clients during a time of economic uncertainty, according to Hirschvogel. Of the €57 billion in AUM Patrizia manages for its clients globally, around €10 billion comes from institutional clients based in APAC.