PERFORMANCE ANALYSIS OF UNLISTED REAL ESTATE FUNDS IN ASIA PACIFIC

Abstract

This study assesses the performance drivers of unlisted real estate funds in Asia Pacific over the period of 2003 – 2019. Using novel data from the Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV), performance drivers which range from Manager-Defined Style (Core, Value and Opportunity Funds); Sector Allocations (Retail, Residential, and Office); and amount of Gearing are considered. The analysis of this 17-year timeframe yielded interesting results that both agreed and conflicted with existing literature. Core funds consistently outperformed across all fund styles including the time period of the Global Financial Crisis. Further, allocation to Office was the sole performance driver that had positive returns across Sector Allocations. Gearing provided interesting statistically significant results. The use of Gearing caused a consistent negative vector impact across all fund styles; the most notable beneficiary being Opportunity funds which generated an average of 6.41% returns to funds via the use of leverage, ceteris paribus. Meanwhile, Benchmarking showed a small positive result of 0.09% with the Asian economy as proxied by the chosen iShares ETF. Overall, both the relatively young industry of UREFs and the private nature of such funds’ information have inadvertently contributed to a smaller pool of existing literature as compared to its public counterparts. Not by coincidence is it then that UREFs remain a relatively underinvested sector. To this end, this paper hopes to contribute to fill this gap with the novel data obtained from, and with the kind assistance of, the Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV).