Asia Pacific 'still a major focus for international real estate investors'

The Nation

Real estate private equity funds will continue rising this year after hitting US$14 billion (Bt455.851 billion) last year, according to CB Richard Ellis.

This is highest since the global financial crisis (GFC), though still well below the $28 billion peak recorded in 2007. Most of the funds raised will translate into direct real estate investments in the region in the coming year, helping to drive the turnover of overall capital activities by 5 per cent in 2015.

Asia-Pacific remains a major focus for international investors, with more new groups looking at the region for the purposes of portfolio diversification and long-term investment. However, it remains challenging for cross-regional investors to invest directly in Asia-Pacific due to the lack of transparency in many markets and their lack of experience in the region.

The gradual global economy recovery and excess market liquidity have led to a steady increase in real estate investment transactions. Confidence among investors from the United States and Europe has recovered and many groups have resumed allocating capital to regions outside their home countries, including Asia-Pacific.

There is less interest in opportunistic funds than prior to the GFC as investors are increasingly focused on capital appreciation, long-term value appreciation and the construction of a diversified global portfolio. Excess returns are no longer their primary motivation for investing in Asia-Pacific.

First time investors seek pan-Asia Pacific vehicles to spread their risk portfolio and minimise exposure to a single asset class or market.

Increasingly experienced investors, particularly from Europe, are more attracted by direct investment and joint investment opportunities in country or sector-specific real estate funds.