Australasia-Based Investors in Private Real Estate Funds - May 2012

There are presently 96 Australasia-based institutions that have an investment preference for private real estate funds. These investors collectively manage over $891bn in assets, of which approximately $60bn is allocated to the real estate asset class.

Superannuation schemes comprise the majority of Australasia-based private real estate fund investors, accounting for 78% of the total. These include AUD 9.5bn superannuation fund HOSTPLUS, which invests in private real estate vehicles across Asia, Australasia and various emerging markets. The superannuation scheme is looking to boost its portfolio?s emerging markets exposure to 50% through private real estate fund investments, equity mandates and infrastructure projects. Asset managers and insurance companies represent 9% and 3% of Australasian private real estate investors respectively, while a mix of sovereign wealth funds, endowments, government agencies and pension funds make up the remaining 10%.

Australian institutions account for an overwhelming 95% of Australasian private real estate fund investors, with the remaining 5% located in New Zealand and Papua New Guinea. Australia-based Challenger is an active investor in private real estate funds and has a wide-ranging portfolio that includes core, core-plus, distressed and debt vehicles.? The AUD 30bn asset manager plans to continue investing in private real estate funds over the course of 2012.

Core is the most popular investment strategy amongst Australasia-based private real estate fund investors, with 87% of these LPs interested in such vehicles. Value-added and opportunistic funds are the next most preferred, with 48% and 47% of Australasian investors concentrating on these strategies respectively. Thirty-five percent of Australasia-based private real estate investors have an appetite for core-plus funds, while 16% prefer funds with a debt focus. Private real estate funds with distressed strategies appear to be viewed as the least attractive at present, with only 9% of Australasia-based investors favouring these vehicles.

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