Swisslake records marked increase in Asia fundraisings

According to the investment advisory group, the number of Asian private equity real estate funds to come to market in the first half of 2011 has almost matched the whole of last year.

Private equity real estate fund managers are becoming increasingly bullish about their fundraising prospects for Asia funds, according to research published today by Switzerland and Singapore-based investment advisory group Swisslake.

The firm said 28 funds were launched chasing $11.2 billion in equity during the first half of the year, up from 17 funds chasing $5.7 billion of equity during the second half of 2010 and approaching the 31 funds chasing $11.5 billion of equity for the whole of last year.

Swisslake said rents were rising across most cities in the region and that had led to increasingly hardening yields as a result of higher demand and low interest rates. The firm said: “China, India, Singapore and Hong Kong continue their expansion and the economic indicators are still mostly positive for 2011.” Swisslake added that Australia’s economic indicators surpassed those of its western hemisphere counterparts, its real estate markets presenting “attractive and stable opportunities with rental growth and low levels of new supply in new major Australian cities.”

“The economic optimism reflects the picture depicted by the Asian private equity real estate fund industry in the first half of 2011. The launch of 28 new funds raising an aggregate $11.2 billion is a start to the year that has not been recorded since H1 2008,” the firm said.

One particular observation Swisslake highlighted was the reappearance of successor vehicles from managers that had launched their first or second Asia funds but had put the vehicles on ice as capital raising conditions dipped.  “This is an important indicator for the revival of the industry”, the firm said.

The firm pointed out that the average size of private equity real estate funds targeting Asia real estate was $399 million, up from the $333 million targeted in the second half of 2010. Swisslake said the average was still slightly below a five-year average recorded by the firm of $414 million and well below the peak of $575 million recorded in the first half of 2008.

The bullish sentiment recorded by Swisslake is not, however, an indicator of the amount of capital actually committed to private equity real estate funds in Asia. According to PERE’s Capital Watch, which is updated monthly in each edition of the PERE magazine, at the end of June little more than $1.1 billion had actually closed. Click here to read our commentary on Asia fundraising from the July/August issue.