Eye on Asia | Global investment in Asian property will become increasingly local as Covid-19 travel curbs bite
- Investors without local offices have been forced to switch to fund vehicles but non-fund vehicle investment will return, as more major investors add Asian expertise on the ground
As well as investing directly in assets, they also invested collectively via joint ventures, club deals and other non-fund vehicles.
In the year before the pandemic began, investors committed a record US$32.6 billion to private real estate in the Asia-Pacific. Of this, 43 per cent went to non-fund vehicles, either through separate accounts or as part of a joint venture or club deal.
Around 56 per cent was committed to traditional fund structures, according to data compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles (Anrev).
When international travel all but stopped, this trend towards greater non-fund vehicle investment reversed. It’s difficult for a Canadian pension fund or Middle Eastern sovereign wealth fund to invest in an Asian asset they have not been able to visit and assess.
That has made it harder for investors to underwrite deals directly. Under pressure to deploy their abundant capital, institutions have – by necessity – become more comfortable investing via fund vehicles once again: they switched from direct to indirect investing.