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International investors target Asia

International property investors plan to raise their exposure to Asian real estate markets over the next two years because they believe the impact of the global credit crunch will be less severe in the region than in Europe or the United States, a survey by two real estate associations has shown.

The survey, conducted last month by the Asian Real Estate Association (Area) and the European Association for Investors in Non-listed Real Estate Vehicles (Inrev), polled the views of fund managers and institutional investors.

Responses from 30 fund managers, 21 institutional investors and 14 managers of fund of funds pointed to growing interest in investing in Asian countries and non-listed property funds in particular.

Ranking top of the target list, the responses showed, was exposure to office space in Japan, with mainland residential investments coming second despite the introduction of austerity measures by the government.

'Real estate investors clearly view Asia as the market of the future,' said Nick Loup, co-director of Area.

Other developing markets on the respondents' radar screens are India and Vietnam, with the residential sectors in both markets singled out for particular attention as having strong growth prospects for the rest of the year.

Responses to the survey showed also that the big investors felt that the credit crunch was having some impact on the Asian property market since it had reduced the ready availability of funding, with a potential for repricing of real estate assets.

But they believed the effect would be less acute in the region than it was in the US and Europe and might even turn out to be positive for Asia, if this meant that capital originally earmarked for these markets were redirected to Asian property.

'The [respondents] were also clearly focused on non-listed funds, considering that these account for 85 per cent of their holdings in Asia, with access to expert management being the main reason for investing in these funds,' said Inrev chief executive Lisette van Doorn. In terms of the rates of return, investors are looking for an average of 10.4 per cent on their portfolios while fund of funds managers are aiming for 15.5 per cent.

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