AOI analysis: Asset owners targeting real asset rise over coming year

AsianInvestor's Asset Owner Insights survey reveals the asset classes are among the top investment priorities for pension funds, sovereign wealth funds and insurers for the next year.
AOI analysis: Asset owners targeting real asset rise over coming year

Asia-based asset owners plan to increase allocation to alternatives such as real estate, private equity, and infrastructure investments over the next six to 12 months, according to data collected by Asset Owner Insights (AOI), an AsianInvestor data intelligence platform.

Conducted in March, the survey collected responses from 37 asset owners that manage a total of $3.18 trillion assets in the region. The survey was conducted by AOI, which was launched in April as a data platform that offers the latest perspectives from more than 100 Asia Pacific asset owners.

Two-thirds of 24 respondents said they planned to increase capital to real estate investments, while only 8% said they planned to decrease capital and 25% said allocation would remain unchanged. The rest declined to answer.

More than half (56%) said they planned to increase future allocations to private equity, and 60% said they would increase capital on infrastructure investments.

Plans for private debt were more divided, as half the respondents said more capital would be put into the asset class, while half said there would be no change.

For real estate, asset owners showed interest particularly for digital infrastructure such as data centres, commercial buildings, and warehouses, while car parks and hotels were among the least popular (see graph below).

Source: Asset Owner Insights (Click for full view)

Property investment advisers previously said that they had seen a rise in interest in the region for logistics and data centre funds, and predicted the real estate asset class will grow by another 10% to 15% over the rest of the year.

In 2020, total real estate assets under management (AUM) in the Asia Pacific region increased to $726.9 billion, up from $608.2 billion the year prior despite the challenges of the pandemic, according to ANREV. Globally, total real estate AUM amounted to $4.1 trillion at the end of 2020, up from $3.6 trillion the year before.

Amélie Delaunay, director of research and professional standards at ANREV, said in a news release that Asia Pacific continues to attract a healthy and growing share of global real estate AUM, reflecting a strong long-term outlook of the region’s property markets despite the impact of Covid-19.

For example, Korea’s Public Officials Benefit Association (Poba) has set aside W1 trillion ($880 million) for new overseas real estate investment largely focused on logistics, residential, and real estate debt in the US and Europe, AsianInvestor reported earlier this month.

Canadian pension funds have also been building up resources in Asia and hiring for investment talent particularly in real assets and equities.

For infrastructure investment, nearly 70% of surveyed asset owners showed interest in sustainability-linked energy assets, while 55% expressed interest in water-related investments (see chart below). Geographically, Asia (excluding Japan and China) was the most popular region, with nearly 60% of respondents saying they preferred Asia for infrastructure investing.

Green infrastructure has been rising in popularity as institutional investors increasingly commit to environmental, social and governance (ESG) goals. However, concerns have been raised about the lack of bankable green projects for capital to be channelled into.

Source: Asset Owner Insights (Click for full view)

If you want to learn more about AOI and how it operates, you can request a demonstration. Alternatively, please contact Tom Griffin, commercial director of AsianInvestor, at [email protected] / (+852) 2122 5262

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