Aberdeen Asset Management has closed its third Asia-Pacific property fund of funds at $512 million and is now planning another similar product, but this time more focused on developed markets.
Aberdeen Asia III Property Fund of Funds (Asia III) will invest across the risk spectrum, from core to opportunistic strategies, and is targeting annual returns of at least 13%. The previous two real estate FoFs focused on the region – AIPP Asia and AIPP Asia Select – were raised in 2006 and 2007, respectively, and are fully deployed.
In line with its two predecessors, Aberdeen Asia III is targeting investments across Asia Pacific through pooled funds, club deals, joint ventures, co-investments and secondaries. To date, the FoF has completed two transactions, with several pipeline investments expected to close during the first half of 2014.
“As with previous mandates, we believe that a significant proportion of opportunities will be sourced off-market,” says Jon Lekander, global head of property multi-manager at Aberdeen.
Separately, Aberdeen's planned property FoF is likely to target annual returns of 8-10% and focus more heavily on developed markets and lower-risk strategies than Asia III. The fund is planned for launch in the first quarter this year, with a cornerstone investor already identified.
Asia III and the planned new fund aim to create diversified portfolios of underlying assets. These will cover the traditional sectors of office, retail, industrial, logistics and residential, as well as niche markets such as healthcare and senior housing, says Aberdeen.
The Asia-Pacific property multi-manager team comprises seven people based in Singapore, is led by Puay Ju-Kang and runs a portfolio of $1.6 billion. In addition to managing Asia-Pacific property FoFs, Aberdeen invests in real estate in the region for segregated multi-manager mandates. At the end of December, Aberdeen managed $29 billion of property assets globally.
The firm's new product comes amid continued and well documented growth in Asian investment flows into real estate, particularly in global financial capitals such as London and New York.
Yet a new report from property data provider IPD argues that investors in North America, Europe, Asia and Australia do not have sufficiently strong risk management procedures and have not integrated their real estate teams into their wider asset allocation systems.
Among those particularly at risk are new entrants to the property market from Asia and the Middle East, which do not have a sufficiently sophisticated understanding of property markets around the world, says IPD.