A new property index, the MSCI/APREA Pan-Asia Quarterly Property Fund Index (APPI), has been launched to improve the transparency of Asia-Pacific’s unlisted property sector.
In collaboration with the Asia-Pacific Real Assets Association (APREA), MSCI has begun to benchmark the performance of pan-Asia Pacific core property funds, which currently have a total net asset value of up to US$16bn (€13.5bn).
Varun Malik, head of APAC real estate client coverage with MSCI, told IPE Real Assets: “We felt the market had come of age with an increasing flow of capital into private real estate in this region.”
Malik said investors looking to diversify globally were turning to pan-regional investment vehicles, which gave them instant diversified international exposure through pan-regional core funds.
The development of a core fund market in Asia-Pacific, which had been slower than in North America and Europe, was partly due to lack of market transparency, he said. MSCI research had shown that “transparency drives more capital flow”.
Sigrid Zialcita, CEO of APREA, said investors in the US or Europe had a plethora of indices to measure the performance of funds in their markets.
“This is why we are partnering MSCI to produce this index,” she said. “Investors are increasing allocations to Asia-Pacific, and, to make sure that these inflows continue, it is imperative that information on the market is available through indices.”
In Asia, assets revaluation took place annually, and the time gap was seen as too long for some investors, Malik said. The index overcame this problem by publishing quarterly valuations of fund assets.
“The new index covers 60% of the addressable market,” said Malik. MSCI was currently in “advanced conversations with other constituents in the market” to jointly augment the benchmarking process.
Eventually, MSCI and APREA would also address climate change, Malik said.
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