(Pictured: Amelie Delaunay)
Australian institutional investors in direct property are increasingly putting their money offshore and it’s mainly going to Europe and the US, rather than within the region, according to the latest investor survey by ANREV.
The Asian Association for Investors in Non-listed Real Estate Vehicles has published its eight annual survey, which also incorporates other international jurisdictions through a sister organisation. It found that Tokyo office buildings was the most popular intended destination for 2015’s investments, followed by office buildings in Sydney and Melbourne and “tier one” Chinese cities.
The latest survey involved 337 respondents, comprising 144 asset owners, 174 fund managers and 19 funds-of-funds managers. Europe had 168 respondents, North America 86 and Asia Pacific 82. Australia had eight respondents.
Amelie Delaunay, ANREV director of research and professional standards, based in Hong Kong, said last week that investors from Asia Pacific were trending more to offshore with their direct real estate. A total of 26 per cent of global investments came from APAC but inly 16 per cent was invested within the region.
The survey indicated a trend to logistics-oriented real estate, such as warehouses, especially in China. Chinese industrial property in tier one cities ranked fourth for expected unlisted property investments this year.
Overall, the average allocation to unlisted real estate is expected to rise from 10.8 per cent to 11.3 per cent of total asset allocation. Delaunay said that back-testing had shown that the intentions stated in the survey tended to be fairly accurate.
About 60 per cent of the Asian investors said they expected to increase their global real estate allocations over the next two years. The main reason stated was the diversification benefits, followed by enhanced returns. The leaning towards office buildings probably reflects the continued demand for yield-type investments in a low interest environment. There was a rise this year in the number of investors looking for “core” property.
Delaunay said that about 40 per cent of global investors intended to lift their exposures to the APAC region.
She said that, since 2013, there was a trend by APAC investors for joint ventures or “club deals”. She said large investors, in particular, wanted more control over their investments.
The main concern for investors, according to the latest survey, is no longer lack of transparency or market information. For the first time since 2008, the main concern stated was availability of suitable product.
ANREV, which has about 200 members in 17 countries, aims to improve transparency in the unlisted real estate field. It has created its own index to assist investors with benchmarking.