Aussie cities among the most attractive for non-listed RE investors

real estate non-listed real estate ANREV INREV PREA Sydney Melbourne Tokyo

14 January 2022
| By Oksana Patron |
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The majority of global institutional investors have said that the COVID-19 pandemic has not impacted their investment plans for real estate assets in 2022, with two Australian cities among  the most attractive destinations, according to the survey by leading associations for non-listed real estate.

Sydney, Melbourne and Tokyo have been named as the top three destinations for institutional investors, with Tokyo and Sydney taking the first place as 76% of surveyed investors said they would hold these two cities high on their radar in 2022, according to the 2022 Investment Intentions survey conducted by Asian and European Associations for Non-Listed Real Estate Vehicles (ANREV and INREV) and the Pension Real Estate Association (PREA).

Osaka had replaced China Tier 1 cities in fourth position, and Melbourne was ranked as third most attractive destination for private real estate capital in the coming year.

However, investors found different sectors attractive in relevance to each of the cities. Tokyo’s residential sector was the most valuable sector for 64% of investors, while industrial/logistics sectors in both Tokyo and Sydney came second.

The study also confirmed that 70% of institutional investors with appetite for non-listed real estate assets were expecting to increase their allocation in the region compared to Europe (61%) and the US (64%).

Investors identified enhancing returns, diversification benefits of real estate in their multi-asset portfolios as well as enhanced as the top reasons to invest in real estate in the Asia Pacific region, while for Europe and North America investments they listed the diversification benefits.

Investors in the Asia Pacific region also showed higher willingness to bear more risks with the hope of getting higher returns, with 28% believing that opportunity style was the most attractive investment strategy for the region.

Unsurprisingly, the industrial/logistics sector remained the most preferred sector for institutional investors in the Asia Pacific region, according to 79% of the surveyed investors, while the residential and office sectors came second, with a still high proportion of investors (73%) indicating their intentions to invest into the sector.

However, it was for the first time since 2013 that the office sector lost its first place and hit its record low among investors in nine years.

At the same time, the retail sector regained one place in the ranking by taking the fourth spot, with around 27% of institutional investors indicating their intention to deploy capital, which showed still a huge preference gap between the retail sector and the industrial/ logistics, residential and office.

Environmental, social, governance (ESG) was set to be a key factor in investment decisions in 2022, gaining momentum across all regions, with 86% of investors surveyed having said they would pay a close attention to a fund's environmentally and/ or socially responsible investments.

 

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