CBRE predicts that the amount of money pumped into Asia-Pacific real estate markets will increase by around 26% in the next couple of years.
As a result of an improved fundraising environment and investors being lured back to real estate in the region, the real estate services firm estimates that about $53bn (€42.6bn) of real estate private equity capital will be deployed by 2020.
The report which is based on CBRE’s latest review of real estate funds, The Next Wave of Capital Deployment, reveals that China, Japan and Australia will be the top three destinations within the next three years.
From 2014 up to the third quarter of 2017, $42bn of capital was raised by Asia Pacific-focused, closed-ended real estate funds. After adding in leverage, it equates to about $116bn of purchasing power.
Since then, 54% of capital has been deployed, with Australia, Japan and China accounting for nearly 75% of this total investment, CBRE said.
“The remaining capital would need to be deployed by 2020, or else funds would need to apply for an extension or return the capital to investors since real estate private equity funds typically have an investment period of three to four years,” the reports says.
Rob Blain, the executive chairman for Asia-Pacific at CBRE, said: “Many funds have under-allocated in China due to concerns of economic slowdown; with clear signs of economic stabilisation, investors are expected to return.
“Japan will also continue to attract solid interest from all types of fund managers because of attractive yields and good fundamentals.
“Across Asia-Pacific, the lack of stock will remain a major hurdle; investors will look to regional cities, niche sectors and conduct development deals.”
The full report can be found here.
