Private equity in the Asia-Pacific region is poised to rebound from a slump in 2023, with Preqin forecasting a compound annual growth rate (CAGR) of 9.5 percent between 2023 and 2029 to reach US$2.6 trillion dollars in assets under management (AUM).

Venture capital (VC) will experience the strongest growth in Asia Pacific, with a projected CAGR of 10.7% over the forecast period, although private equity will remain the largest asset class.

Venture capital in the region is expected to deliver the strongest returns at 16.3%, even surpassing North America’s 15.6%.

Preqin noted that the greatest potential lies in early-stage venture capital investments.

"Early-stage investments tend to be smaller investments at lower valuations, which limits absolute downside risk, and by exposing to a larger number of small deals, this allows for more portfolio diversification," it said.

"Emerging markets in the Asia-Pacific region such as India and Southeast Asia offer diverse opportunities in various sectors with favorable demographics for economic growth, which is why they have gained greater appeal among investors in recent years."

Meanwhile, private equity in the Asia-Pacific region is projected to slightly lag other regions, returning 12.9 percent between the end of 2023. and 2029

This, the report points out, reflects the concerns surrounding the Chinese market.

"Since roughly half of AUM is in China-focused funds, our underperformance projections include our assumption that realization levels will be lower and exit times will be longer over the next few years, mainly in the Chinese market,” it said.

"This will be partially offset by improvement from exposures in other markets such as India and Japan."

In addition, Preqin data predicts a real estate recovery in the Asia-Pacific region with a return of 7.1% between 2023 and 2023. and 2029, compared to 3.5% in 2020-2024.

Preqin noted that amid uncertainty in China's property market, investors are increasingly shifting their focus to core, core plus and value-added strategies in markets such as Japan, Australia and South Korea, seeking greater stability and yield.

"Furthermore, global diversified funds that are not bound by an APAC-only mandate are also increasingly participating, helping to maintain deal flow and market liquidity," the report said.

The report also identifies infrastructure in the Asia-Pacific region as a relatively bright spot, projecting a return of 9.4% between 2023 and 2023. and 2029 In particular, he highlighted the region's pressing infrastructure needs, ranging from major projects such as road construction to advanced upgrades in renewable energy, energy and digital assets.

On the other hand, Preqin expects Asia-Pacific private debt returns to slow to 10.4%, down from recent highs but still above the 9.2% achieved between 2017 and 2017. and 2023