Asia-Pacific portfolio grew over 16% in the first three quarters of 2020. / Successfully raised EUR 1.4 billion of third-party capital to “invest alongside Allianz”. / Opened new offices in Tokyo and Shanghai, expanding its on-the-ground capabilities.
Allianz Real Estate, the dedicated real estate investment manager within the Allianz Group and the world’s largest investor in real estate, has continued to grow its portfolio across the Asia-Pacific region in 2020 despite the COVID-19 pandemic. The firm recorded a 16% increase in its assets under management across the region to EUR 6.4 billion as at 30th September 2020, from the EUR 5.5 billion recorded as at 31st December 2019. The portfolio is well diversified across 40 investments in eight markets in the region. Approximately 40% of the exposure is in fast growing markets like China and India. Office accounts for 35%, whereas “beds and sheds” accounts for 55%. Retail exposure is largely in the non-discretionary space and there was no direct exposure to hospitality.
Navigating 2020
Rushabh Desai, CEO Allianz Real Estate Asia Pacific
Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, said, “Despite the COVID-19 crisis, our business in Asia-Pacific has grown from strength to strength. With our growing on-the-ground presence in key markets and close relationships with local best-in-class partners, we were able to continue our operations amidst the pandemic as different markets re-opened at varied paces. The crisis has validated our investment thesis within the region, as secular macro trends, such as urbanization, domestic consumption, infrastructure, localization, and digitalization, were accelerated by the pandemic. The resiliency of our portfolio and the strength of our asset management organization is reflected in the portfolio performance where our occupancy and rental collections have reverted to pre-COVID levels and positions us well for the future.”
During the year, Allianz Real Estate completed several acquisitions, which include a 50% stake in a portfolio of six ALDI Distribution Centers in Australia on a triple-net long-term sale and leaseback basis, 100% acquisition of two prime residential portfolios in Tokyo comprising 655 units, and 100% acquisition of a portfolio of prime student housing assets in Melbourne.
In June 2020, Allianz Real Estate Asia-Pacific broke new ground by successfully raising the firm’s first third-party equity fund called AREAP CORE I, a EUR 2 billion investment platform to build a diversified core portfolio of high-quality properties in the Asia-Pacific region.
“We are humbled by the response we received from like-minded institutional investors to invest alongside Allianz. AREAP CORE I is a strong start and we would like to build on from here. The combined scale, global experience and local expertise of Allianz and third-party investors will provide prioritized access to attractive investment opportunities and help the investors build a diversified quality portfolio”, said Mr. Desai
As part of its localization strategy to support the region’s growth, Allianz Real Estate opened offices in Tokyo and Shanghai in May 2020, complementing its Asia-Pacific hub in Singapore.
Allianz Real Estate continues to ramp up its ESG efforts in the region. Highlights include the LEED Platinum certification for Ronsin Technology Centre, a 130,000 square meter (“sqm”) office complex in Beijing, within four months of acquisition, and re-certification of Duo Tower & Galleria, a 57,000 sqm mixed use development in Singapore acquired in 2019, to Green Mark Platinum. In Singapore, the Allianz Real Estate team moved to a new office, designed with the sustainability and wellness of employees in mind including the use of indoor air quality sensors, provision of filtered water, clean desk policy, provision of separate room for printing and waste removal.
Looking ahead
Allianz Real Estate will continue to increase its exposure in Asia-Pacific, which offers an ideal balance between developed economies and growth economies, with strong secular consumption growth supporting stable real estate demand. The firm’s regional focus is on expanding its office, logistics, and residential portfolio while selectively diversifying into alternative sectors, such as student housing and data centers.
Mr. Desai added, “Negative real risk-free rates provide continued support for real estate yields. Our focus will be on diversified core and manage-to-core strategies, with tactical allocation to value-add and opportunistic investments.”
The firm remains committed towards reaching the Allianz Group’s target allocation of 10-15% of its global real estate portfolio to the Asia-Pacific region.
