Funds of funds: Asia is the target
Shaun Stevens, senior product specialist, Fortis Investments
Fund of funds investors are attracted to Asian real estate by the region’s combination of economic and demographic growth and rapid urbanization. The results from the Inrev Fund of funds Directory show that Asia is quickly becoming a growth area in this sector, with 13 out of the 36 funds targeting Asia as all or part of their strategy. This amounts to a target equity figure of €1.8 billion.
Investors want access to the region’s growth opportunities but also to the diversification benefits that Asian exposure can bring to an international real estate strategy. Although Asia is increasingly opening up to foreign direct investment, the markets have limited transparency and liquidity, making the indirect, non-listed route an attractive option. For example, in China, India and Korea, where we have experience of investing, the markets are very inefficient and sourcing the right opportunities is demanding. The lack of existing product requires partnering with local players to benefit from their market knowledge and infrastructure. Consequently, we believe the fund of funds route is the logical way to invest in the region, so we can use our expertise as an investment manager to choose the best local real estate managers.