Dutch investor Bouwinvest has operated from Australia since the late 2010s. Florence Chong speaks with Sydney-based Robert Koot about the broader APAC strategy.
In the late 2010s, as global institutional investors were busily establishing a presence in Hong Kong – and less so in Singapore – to be closer to investment markets in Asia- Pacific, the Dutch institutional investor Bouwinvest chose Sydney as its base.
For the APAC region, Sydney became its listening post for opportunities to invest predominantly in logistics and the living sector in seven selected markets in the region – Australia, Japan, South Korea, New Zealand, China, Singapore and Hong Kong.
“Bouwinvest manages capital on behalf of institutional investors in the Netherlands, the rest of Europe, North America and the APAC region. The APAC portfolio it manages is on behalf of Dutch pension fund bpfBOUW.
A decade on, Bouwinvest found itself focused on the first three of these markets.
“Australia is our number one market, taking up 40 to 45 per cent of our allocation. Japan is our second-largest, with around 25 to 30 per cent, and all other markets hover between 5 and 10 per cent,” says Robert Koot, Director of Asia- Pacific Investment at Bouwinvest, adding that South Korea is potentially a growing market.
“We have invested in both Hong Kong and China,” he says. “But these investments are a fairly small part of the APAC portfolio. We don’t foresee making new investments in these two markets because we feel the risk premium for investing in China especially, fueled by geopolitical events, has gone up.”
When we look around the world, we see office having a place in society. Yes, there is more work-from-home, but in many cities around the globe, employees are gradually – albeit slowly - returning to work in office.
While he likes Singapore, Koot admits that getting access to this tightly-held market, especially in the non-listed sector, is challenging. Investing in Singapore is “a bit more opportunity-driven,” he says. “But we can also invest via the listed real estate companies.”
He adds: “We have been active in logistics in Singapore, but we are now selling some of our logistics exposure there.” Bouwinvest recently entered the living sector through a newly-established partnership with CapitaLand Ascott Residence Asia Fund II, CapitaLand Investment Limited’s latest lodging private fund. “Now that we have made the first acquisitions, we are hoping to do more there.”
Demand for logistics is strong especially in Australia. Supply is increasing, and, if it can be kept in balance with demand, the outlook is “still very good”.
South Korea is another market of opportunities because of repricing occurring in parts of the market, says Koot. Bouwinvest has an investment program for South Korea where it is part of a partnership, managed by LOGOS, which is executing a develop-to-core strategy.
Koot says the club, involving two other investors, raised over US$500 million two years ago. “We kept a lot of powder dry because we could see the market was starting to correct. We are now in deployment mode, and our portfolio is filling with assets, which is a good thing. We expect to be fully-invested in the next 12 to 18 months.”
Residential and Logistics
He says Bouwinvest is “taking an overweight position” to the living and logistics sectors. “These are our preferred sectors. Our focus over the next one or two years will be to grow that part of the portfolio further.
“(But) we don’t shy away from other sectors. We invest when we can see good opportunities. It depends on the objectives, so having value-add, or ‘brown to green’ in the office space could still be a very good strategy. When we look around the world, we see office having a place in society.
“Yes, there is more work-from-home, but in many cities around the globe, employees are gradually – albeit slowly – returning to work in office. In Asia particularly, workers have mostly returned to the office. Asian cities are relatively well-positioned, and in Seoul, as an example, there is hardly any vacancy.
“It is true that in a place like Sydney, the market is more polarised. But there continues to be strong demand for premium office space, so we definitely don’t shy away. And we also don’t shy away from retail.”
Overall, the Bouwinvest portfolio is made up of 20 to 40 per cent in logistics with a slightly higher allocation to the living sector. Office and retail represent around 20 per cent each.
We take quite a moderate approach. We don’t need to achieve annual returns of 20 or 25 per cent. That is not what we are here for. We are long-term patient capital for Dutch pension funds
Koot says there is a small allocation to healthcare, a sector that it likes. He explains that this small role in the portfolio has to do with accessibility and availability in the market.
“It is a sector where we see long-term tailwinds. Many countries are ageing, so healthcare is a long-term thematic for investors. We categorise housing for people with disabilities as care in the same way as we treat assisted living in Japan as care.”
Asked about his returns criteria when investing in either a sector or a country, Koot says: “Different markets have different return combinations. We look at the returns on a 10-15-year basis.
“If we invest, say, in BTR in Australia, and we commit X amount there, we will want to achieve a certain level of return over the long run. Suffice to say that, for us, the numbers work,” he says, adding that Bouwinvest has modest expectations.
“We take quite a moderate approach. We don’t need to achieve annual returns of 20 or 25 per cent. That is not what we are here for. We are long-term patient capital for Dutch pension funds.”
“Our commitment to serving long-term investors such as bpfBOUW is reflected in our approach to investment: we provide patient, capital with a keen focus on ESG principles. This long-term perspective ensures that we not only meet the financial objectives of our clients but also contribute positively to their broader societal and environmental goals.”
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