Open-ended core funds market in Asia Pacific will play a key role in responding to global investors’ shifting preferences from short-term opportunism to long-term investing in the region and are likely to become a key factor in driving real estate market dynamics.
The development of open-ended vehicles will increase asset liquidity and price competitiveness in the region. For as long as real estate remains an attractive asset class, demand for prime properties will continue to drive real estate investments. In fact, core funds –seen as the less risky but lower return option – have outperformed their closed-end counterparts in terms of returns and capital raising so further raising their attractiveness.
The number of open-ended core vehicles in the region has doubled from 18 funds in 2007 to 36 funds today. However, the continued growth in open-ended core funds will depend on the availability of investable real estate stock, further transparency in the Asia Pacific real estate market, and an ample availability of debt.
Trends show that Asia Pacific is on track to fulfil these prerequisites. In 2017, Asia Pacific real estate stock totalled USD 16 trillion, accounting for 30% of total commercial real estate globally. By 2020, Asia Pacific’s investable stock is expected to grow by 28%, surpassing Europe by about USD 2 trillion. When it comes to commercial real estate transparency, Asia Pacific has improved more consistently than any other region. Nine of the world’s top 30 most transparent markets are in the region, with Australia ranked second and New Zealand sixth.
Find out more about the growth and performance of open ended funds in the region by reading our report “The open-ended core funds landscape in Asia-Pacific.”