BlackRock Inc says appetite of Asian institutions for local real estate bets is back
BlackRock Inc, the largest asset manager in the world, said the interest of Asian institutions for local real estate investments is back in their quest for yield for their growing assets in a period of low interest rates, Bloomberg reported.
Joseph Pacini, BlackRock's alternative investors strategy group Asia Pacific head, told members of the media in Hong Kong yesterday that investors are expected to invest more funds and deploy a larger percentage of their property allocations to Asia, particularly in the commercial real estate segment.
Pacini said, "What has been surprising is that Asian real estate has not been part of the equation for a number of years. Now it's popping back up again." Pacini's group manages $119 billion of assets worldwide. These include investments in hedge funds, properties, infrastructure, private equity, commodities and currencies, the report said.
Since December 2008, interest rates were kept to near zero by the US Federal Reserve in a bid to improve growth after a financial crisis around the world ushered in the longest recession experienced since the 1930s. Because of the reduced interest rates, government funds, insurance firms and other institutions are lured to investment in alternative assets like properties and infrastructure in a bid to get better yields, the report said.
Last month, the Fed said it continue to retain the benchmark rate close to zero even after the unemployment rate goes under 6.5%. In July, European Central Bank President Mario Draghi also said that the rates would still be low for a prolonged period, the report said.
According to Pacini, the revival of interest in Asian commercial properties represented a shift from the happenings in the past few years when Asian institutions looked for opportunities in a small number of cities in developed markets located in North America and Europe, the report said.