Asian property funds to expand to $200 billion in coming years

Asian property funds to expand to $200 billion in coming years

Dec 9, 2009 - PropertyGuru.com.sg

Asia's property fund size will expand by over 50 percent to $200 billion in the next two to three years. This is fueled by demand from institutional investors from several countries including China, industry executives said.

Sovereign wealth funds, pension funds, and wealthy individuals would likely enhance their portfolios for property funds in the coming years after interests waned harshly during the sharp economic recession earlier this year, said the executives.

“The next 12 months will probably be a bit slow because we are still coming out of this difficult global situation, but then I think it will pick up more quickly after that,” said Nicholas Loup, Asia-Pacific chief executive of Grosvenor Limited, a UK-based private property group.

Fund managers from Asia have $130.9 billion worth of property assets under management, as shown in a survey conducted by the Asian Association for Investors in Non-listed Real Estate Vehicles, a non-profit organization that focuses on fund-related firms within the region.

This first-ever survey done by the association showed that the total global property funds have reached $409.6 billion. According to Loup, chairman of the association, Asia's fund size could easily generate $200 billion over the next few years, excluding risks outside the region, like debt issues faced by financial institutions in markets outside Asia.

“The big sovereign wealth funds in the region, the Chinese insurance companies, will start investing, (and) you'll see the Middle East looking more eastwards for their capital to be deployed,” said Morgan Stanley Asia Managing Director Willem de Geus.

Morgan Stanley, Australia's AMP Capital and Singapore's CapitaLand Financial are the top three property fund managers in Asia, composing nearly 40 percent of the total property funds in the region, the survey showed.

“We are doing some homework at the moment on domestic Chinese funds and domestic Indian funds. We haven't decided on anything yet,” said de Geus.