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Asia fundraising up 164% over last 12 months

Emerging markets in Asia are very much on the private equity real estate map as fund managers channel significantly more capital to the region. The first half of 2008 saw funds target $30.4bn through dedicated Asia funds focusing on countries from China to Cambodia and India. By mid-year 2007 just $11.5bn was being raised for Asia-focused funds.

GPs are increasingly directing capital to the emerging markets of Asia, after proprietary data by PERE magazine revealed that the amount being targeted by Asia-focused funds during the first half of 2008 totaled $30.4 billion (€19.3 billion). Compared with the first six months of 2007, just $11.5 billion was being raised by funds targeting Asia – an increase of 164 percent.

China and India saw the most interest with China-focused real estate funds accounting for $5.3 billion of the 2008 first-half total, and India-focused funds constituting $9.5 billion, almost a third of the total. Funds in market with Pan-Asia strategies came out on top targeting $14.4 billion.

In comparison, Europe-focused funds in market for the first half of 2008 totaled approximately $24.3 billion, according to PERE, while funds targeting the Americas amounted to $40.9 billion. The first half of 2007 saw $11.5 billion of funds targeting Europe and $42.3 billion of funds targeting the Americas.

A recent report by New York-based real estate fund of funds, Clerestory Capital Partners, also confirmed Asia had become a major investment destination for property investors. The firm’s research revealed that of the $54 billion targeted by small cap opportunistic real estate funds (targeting less than $1 billion) during the first quarter of 2008, $22 billion was being raised for real estate in Asia, compared to $19 billion for the Americas and $11 billion for Europe.

The Clerestory survey also revealed that out of the 128 funds in market in the first quarter of 2008, 51 were focused on the Americas, 47 on Asia and 24 on Europe. In 2007, 44 funds were focused on the Americas, 39 focused on Asia and 14 funds on Europe.

With the first six months of the year now behind us, property funds targeting Asia have closed on $6.4 billion in total equity capital to date in 2008, compared with approximately $4.9 billion closed in the first six months of 2007. London-based MGPA’s $3.9 billion MGPA Asia Fund III fund, which closed in June, was the largest dedicated Asia fund to be raised ever, accounting for more than half of the total amount closed so far this year. Hong Kong-based ARA Asset Management also closed its $1.1 billion ARA Asia Dragon Fund last month.

A list of Asian funds in market and funds closed each month can be found in PERE magazine.