Inrev investors remain committed to Asian funds

Investors remain committed to Asian non-listed real estate funds, although they have put short-term allocations on hold, according to the latest research from Inrev, the European association for non-listed real estate funds, in cooperation with sister organisations Area and Prea.

The results of Investment Intentions Asia 2009 show that at 50%, twice as many investors intend to increase allocations to Asian non-listed real estate funds in the medium term (3-5 years) versus 24% in the short term (1-2 years).

The more optimistic medium-term outlook by investors also aligns with respondents’ views that the Asian real estate markets will start to recover in 2010. Investors and fund managers were most optimistic about a recovery starting in 2010 at 67% and 72% respectively. This compares to a majority of fund of fund managers at 50% who expected recovery to begin in 2011. A more pessimistic outlook from fund of fund managers may be due to their tendency to invest with higher risk/return strategies in the region, the Inrev research shows.

China, Australia and Japan featured in eight of the top 10 location and sector pairings preferences of survey respondents. China residential and retail investments led the way for investors, while China retail, Australian offices and Japan offices were the focus of fund of fund managers. Japan offices also proved most appealing among fund managers, followed by China residential.

'Investors’ continued commitment to Asian non-listed real estate funds demonstrates their added value in investment portfolios,' said Lisette van Doorn, CEO of Inrev. 'The short-term pause in allocations totally reflects the current market circumstances where investors are concentrating on their existing investments. These results are in line with Inrev’s Investment Intentions Europe Survey, published at the beginning of this year.'

Respondents say the main challenges when investing in non-listed property funds in Asia were market conditions and the lack of transparency.

The survey provides a guide to the expected trends of participants in the Asian non-listed real estate funds industry over the coming year. It was carried out with AREA, the Asian Non-Listed Real Estate Association, and for the first time, PREA, the Pension Real Estate Association in the US. The survey attracted 73 responses, an increase from 65 in 2008.