Private Fund Market

Starting in 2003, Sumitomo Mitsui Trust Research Institute Co., Ltd. (SMTRI) has conducted the “Survey on Private Real Estate Funds” as part of its research activities concerning real estate investment markets. Based on the results of the survey, hearings and published information, we estimated the market size of private real estate funds (on an invested asset basis) as of the end of June 2016 to be 15.5 trillion yen.

Market Size of June 2016 [released September. 2, 2016]

Assets under management (AUM) as of the end of June 2016 were 15.5 trillion yen. The market size, had been on a decline since the January 2013 survey, increased approximately 660 billion yen from the last survey, the trend reversed for the first time in 4 years.

The number of asset managers whose AUM increased largely exceeded the number of asset managers whose AUM decreased. Overall, the market size increased approximately 4.4% from the previous January 2016 survey. In the past few years, asset managers, primarily foreign managers, have sought to sell of properties, while recently this trend has slowed. We estimate that many asset managers’ asset sizes have increased, reflecting active acquisitions of properties, which exceeds sales.

In regards to involvement in open-ended private funds (so-called private REITs), 14 managers answered that they have already launched. In terms of important factors for development in the private REITs market in the future, the largest number of respondents chose “Expansion of the categories of investors to invest in funds”, it exceeded “Expansion of the numbers of private REITs and the asset size” ,the largest managers chose in the previous January 2016 survey and the July 2015 survey. The market of private REITs has expanded to some extent. We can say that the market is entering the second stage, where the market will pursue not only the size but also stable quality.

(*)We define “global fund” as a fund targeting real estate investments in various countries including Japan.

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Survey on Private Real Estate Funds in Japan July 2016 – Results (PDF:768KB)

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