Generali Real Estate has started diversifying in Asia Pacific after last year appointing Andy Tan to head its Asian operations.
Since the start of this year, it has made several forays into Asian real estate funds, Tan said.
The group has been in Asia’s insurance market for more than 30 years, but has just begun investing in real estate.
The new emphasis on Asia is part of a strategy to diversify out of Generali’s home market into new markets in Asia and the US. It entered the UK market three years ago.
Generali is focusing on Australia, Japan, Singapore, South Korea and China.
“Within the five key markets, there are different cycles,” Tan recently told delegates at the Real Estate Investment World Asia 2016 conference in Singapore.
“Singapore and China are going through repricing, while Japan and Australia are becoming overpriced.”
He said many global institutions and sovereign wealth funds are pushing to expand their investment universe.
“We have seen British, French and American institutions in this part of the world for a long time,” said Tan, who is chair of the Singapore chapter of the Asia Pacific Real Estate Association (APREA).
“After the European crisis, I think many of the European institutions have been looking for more diversified returns from their portfolios. This process has started and will continue.”
Tan said the various Asia core funds, which offer assets through their vehicles, are a good way for institutional investors making their entry into Asia.
Core assets in the office, retail and industrial sectors are preferred he said, with a focus on income-producing residential property in Japan.
Tan said some institutional investors are prepared to place their capital with institutional investors in value-add or opportunistic vehicles to extract higher returns.
As Generali becomes more comfortable with Asian real estate, it is likely to enter into small club arrangements or joint ventures to access quality core assets in the region, he said.
Tan said the different approaches – funds, clubs and joint ventures – offer institutional investors, particularly insurers, the ability to build a more diversified portfolio.
But Tan warned investors to be cautious with China. “I see an issue of pricing in China and I am concerned about its immediate economic outlook,” he said, adding that investors seeking yields would shun markets that are volatile.
