Fund managers look towards Asia for real estate investment

Amid a climate that remains harsh for property fund managers, the focal point for sourcing capital is shifting inexorably to the East.

Asia-based institutions are by far the most likely to award new mandates to private real estate investments next year, according to figures from data provider Preqin. In all, 71 per cent say they are likely to make new commitments to the sector over the next 12 months, double the rate of United States investors and triple the rate of European investors.

More than half the institutions polled in North America (56 per cent) and Europe (61 per cent) said they had no intention of putting more money to work in real estate in the year ahead. The figure of inactive institutions was only 6 per cent in Asia.

Their intentions were highlighted by deals such as the purchase of the Lloyd's Building in London by Chinese insurer Ping An for £260 million (HK$3.2 billion). The deal for the "Inside-Out Building" signalled the first overseas property purchase by a Chinese insurer after Chinese regulators began allowing them to invest in real estate for the first time.

Gaw Capital, which advised on the Lloyds deal, recently stopped taking new investment on its China-focused Gateway Real Estate IV, having raised US$1.025 billion.

It is also advising institutions from China and South Korea, in particular, on overseas investments, but says good deals are harder and harder to come by.

"Opportunities are getting harder to find. There's a lot of domestic capital in the United States," Goodwin Gaw, the founder of the company, said.