THE majority of investors don’t expect the ongoing global pandemic will impact their plans for 2022, while ESG factors are at the forefront of investment decision making.
According to ANREV’s 2022 Investment Intentions Survey, 62% of investors globally responded that COVID-19 would not affect their investment plans this year.
Allocations to real estate is targeted at 10.1%, while currently at 8.9%, indicating a continuation of incoming institutional capital into the asset class for 2022.
Additionally, 61% of those surveyed anticipating a rise in their real estate allocation over the coming two years.
When looking at the world’s regions, the Asia Pacific remains the most enticing as 70% of those surveyed responded with expectations of increasing their allocation in the region.
“The 2022 Investment Intentions Survey confirms that the Asia Pacific region remains most attractive to investors expecting to increase their allocation within the next two years,” said Amélie Delaunay, director of research and professional standards at ANREV.
Investors into the region noted the enhancing returns and income as well as the benefits of diversified real estate in multi-asset portfolios as the main motivation for investing in the Asia Pacific.
61% respondents replied with plans to increase their allocation in Europe and 64% for the US, with the diversification benefits of real estate in a multi-asset portfolio coming up as the dominant reason for investing in the asset class in these regions.
In the Asia Pacific 38% of investors noted a preference for core strategy, with 34% naming value added as their preferred style and 28% naming opportunity style.
“The latest results also reveal intriguing shifts towards core and value-added strategies as well as the growing importance of ESG considerations, including net zero carbon commitment and DEI, when investing in the region, prepping the Asia Pacific investment industry for an interesting coming 12 to 24 months,” added Delaunay.
ESG continues to become a significant player in investment decision making in all regions for 2022, though this was most apparent in the Asia Pacific where 100% agreed that promoting ESG is important, compared to 79% in Europe and 56% in North America.
68% of investors surveyed named net zero carbon commitments as a key proponent when looking to invest in a non-listed real estate fund, with 86% of investors also naming a fund’s environmentally or socially responsible investments as a major motivating factor, while 66% named diversity, equity and inclusion as important.
Across the Asia Pacific region, Tokyo, Sydney and Melbourne emerged as the top investment destination for institutional investors for the year, with both Tokyo and Sydney seeing 76% of investors with plans for investment. Following Melbourne, Osaka pulled into fourth, followed by Seoul, while China Tier 1 dropped to sixth place.
“Meanwhile, the Survey also finds that access to specific sectors like industrial/ logistics, and geographic destinations like Japan and Australia, are cited as key reasons for investing in Asia Pacific real estate markets via non-listed real estate funds,” said Delaunay.
Indeed, with 79% of respondents planning to invest in the sector in 2022, the industrial and logistics were the most sought after sector by institutional investors in the region for the first time on record, knocking the office sector from the top spot for the first time since 2013.
This was followed by both residential and office with 73% of respondents indicating plans to invest, while retail saw 27% of institutional investors declaring plans for investment.
More specifically, when combining city and sector Tokyo’s residential market was the most desired place for 2022 investment according to 64% of those surveyed, followed by both Sydney and Tokyo industrial and logistics, followed by both Seoul and Osaka residential.
