International instos keen on Sydney and Melbourne

Sydney and Melbourne are likely to remain the top investment destinations in the Asia Pacific for institutional investors in 2021, with North American and European interest expected to rise sharply.

A recent survey by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) showed there was still strong appetite for real estate in the Asia Pacific region, despite the ongoing international challenges of the pandemic.

Around 77 per cent of respondents said COVID-19 had not changed their investment plans, with investors to increase allocations to real estate rather than reduce them.

ANREV said Sydney and Melbourne remained the top investment destinations, followed by Tokyo in third.

“Australian real estate will likely see much stronger interest from North American and European investors this year, with 100 per cent and 83 per cent of North American investors naming Sydney and Melbourne as a top investment location in 2021, compared with 60 per cent and 40 per cent, respectively last year,” the ANREV report said.

“Meanwhile, the proportion of respondents from Europe naming Sydney and Melbourne as among their top destinations rose from 75 per cent to 82 per cent, and 66.7 per cent to 73 per cent, respectively.

“However, Tokyo is for the second time the year’s top pick for European investors, with 91 per cent naming it as their most preferred investment destination.”

The top three asset classes for institutions were office, industrial and logistics, and residential.

ANREV director of research and professional standards Amélie Delaunay said investors were still keen on Asia Pacific property despite the disruptive events of 2020.

“Real estate investing is for the long term, with the survey clearly showing that the pandemic has not knocked the underlying fundamentals underpinning the growth of Asia Pacific’s real estate market, nor the important diversification role the region plays in portfolios,” Ms Delaunay said.

“Non-listed real estate funds remain the preferred investment route to Asia Pacific markets, with 65 per cent of investors indicating their willingness to increase their allocation through this route.

“This preference for non-listed real estate funds might have been reinforced by the travel restrictions in place due to the COVID-19 pandemic.”

The ANREV survey, which was conducted in collaboration with the group’s European and North American counterparts, quizzed 99 institutional investment groups and funds managers from 21 countries.

The collective value of the funds under management by respondents includes $US744 billion ($968 billion) held by institutional investors, and $US102 billion ($132 billion) under the guidance of funds managers.