COVID outsourcing concerns in buoyant Real Assets sector: A guide for Asia-Pacific managers (CITCO)

The global economic disruption and uncertainty in capital markets caused by the COVID pandemic has done little to negatively impact the Real Assets sector; in fact, it has emerged as a haven for institutional investors seeking opportunities amid the turmoil.

A recent Investment Intentions 2021 survey from PREA, INREV and ANREV, which included 84 institutional investors and 15 Fund-of-Fund managers, highlighted that COVID has not decreased but increased investors’ appetite for real estate. Almost half (46%) of the institutional investors surveyed expect their real allocations to increase over the next two years - with Sydney, Melbourne and Tokyo as preferred investment locations - while only 7% expect it to decrease.

In addition, Preqin expects global AUM growth in alternative assets to average 9.8% per year from $10.7tn in 2020 to $17tn in 2025, despite a turbulent 2020 and start to 2021.

It is clear that the current, persistently low interest rate environment in the Asia-Pacific region in particular is attracting investors to alternative assets with the promise of outperformance, diversification and lower correlation with public markets. It is also clear that managers will need to scale their administration function to cope with this influx of assets. However, what considerations do Asia-Pacific managers need to take on board – such as the potential reputational impact of sourcing jobs overseas in a high unemployment environment – when scaling up their administration?