Asia property funds to top US$200 bil in coming years

HONG KONG: Asia's property fund size will expand by more than 50% in the next two to three years to US$200 billion (RM678.6 billion), driven by demand from institutional investors from countries including China, industry executives said on Dec 8.

Pension funds, sovereign wealth funds and affluent individuals would likely boost their portfolios for real estate funds in coming years after appetites waned sharply during the sharp economic downturn earlier this year, the executives told Reuters.

“The next 12 months will probably be a bit slow because we are still coming out of this difficult global situation, but then I think it will pick up more quickly after that," said Nicholas Loup, Asia-Pacific chief executive of UK-based private property group Grosvenor Ltd.

Asia's fund managers have US$130.9 billion of property assets under management, based on a survey by the Asian Association for Investors in Non-listed Real Estate Vehicles, a non-profit organisation focussing on fund-related companies in the region.

The current global property fund totalled US$409.6 billion, the association's first-ever survey showed.

Loup, who is also chairman of the association, said Asia's fund size could easily top US$200 billion over the next few years, barring risks external to the region, such as debt problems faced by financial institutions in markets outside Asia.

"The big sovereign wealth funds in the region, the Chinese insurance companies, will start investing, (and) you'll see the Middle East looking more eastwards for their capital to be deployed," said Willem de Geus, managing director for Morgan Stanley Asia.

Morgan Stanley, Singapore's CapitaLand Financial and Australia's AMP Capital, are Asia's top three property fund managers, making up nearly 40% of the region's total property funds, the survey showed.

With growing appetites for property funds in Asia, Morgan Stanley is considering launching products aimed at institutional investors in potentially lucrative emerging markets.

"We are doing some homework at the moment on domestic Chinese funds and domestic Indian funds. We haven't decided on anything yet," de Geus said. -- Reuters