Fundmanagers look to Asia
Ping An has made a big foray into London's City financial district by buying the Lloyd's Building. Photo: AFP
Amid a climate that remains harsh for property fund managers, the focal point for sourcing capital is shifting inexorably to the East.
Asia-based institutions are by far the most likely to award new mandates to private real estate investments next year, according to figures from data provider Preqin. In all, 71 per cent say they are likely to make new commitments to the sector over the next 12 months, double the rate of United States investors and triple the rate of European investors.
More than half the institutions polled in North America (56 per cent) and Europe (61 per cent) said they had no intention of putting more money to work in real estate in the year ahead. The figure of inactive institutions was only 6 per cent in Asia.
Their intentions were highlighted by deals such as the purchase of the Lloyd's Building in London by Chinese insurer Ping An for £260 million (HK$3.2 billion). The deal for the "Inside-Out Building" signalled the first overseas property purchase by a Chinese insurer after Chinese regulators began allowing them to invest in real estate for the first time.
Gaw Capital, which advised on the Lloyds deal, recently stopped taking new investment on its China-focused Gateway Real Estate IV, having raised US$1.025 billion.
It is also advising institutions from China and South Korea, in particular, on overseas investments, but says good deals are harder and harder to come by.
"Opportunities are getting harder to find. There's a lot of domestic capital in the United States," Goodwin Gaw, the founder of the company, said.
"The pickings are slimmer. You either have to go farther up the risk curve or to other cities. They [Asian institutional investors] are going to have to get out of their comfort zone, and the volume of deals will slow."
Chinese insurers alone have "dry powder" of US$14.4 billion to invest in international real estate, according to property consultancy CBRE, favouring high-transparency markets such as Australia, Canada, Hong Kong, the United Kingdom and the United States. Likewise, a rule change in Taiwan means insurers there can invest up to 10 per cent of shareholder's equity in property, which CBRE says is likely to see around US$2.6 billion move overseas.
Sovereign wealth funds and pension funds are also highly active. That makes Asia the most fruitful fund-raising destination for the 452 private property funds that Preqin says are on the road looking to raise money.
The Blackstone Group has two huge funds in the works, including the world's largest in fund raising, Blackstone Real Estate Partners Europe IV, at €5 billion (HK$51.9 billion).
The Blackstone Real Estate Partners Asia fund, which follows an opportunistic strategy, is looking to raise US$4 billion, the third-largest fund in the world being marketed to investors.
The Blackstone funds sit either side of the Lone Star Real Estate Fund III in terms of size, a global fund that is looking to raise US$6 billion.
The fact that Asia is also the most popular region as a destination for investment for Asian institutions suggests there would be a market for more such funds. Of the Asian institutions tracked by Preqin, more than half (55 per cent) said they were targeting their home region in the year ahead, while a little more than one-third (35 per cent) of European investors are also targeting the Asian region.
The tally for North American investors is only 8 per cent.
The "home bias" for Asian investors has resulted in some particularly large closures for Asia-focused funds this year, according to data compiled by Preqin.
Singapore-based Alpha Investment Partners has the largest pure Asia fund closure so far this year, at US$1.65 billion, with the value-added Alpha Asia Macro Trends Fund II, a pan-Asia fund. Another Singapore manager, Mapletree Investments - backed by the Singapore government - raised US$1.4 billion with the opportunistic and value-added Mapletree China Opportunity Fund II, which focuses on China.
The third billion-dollar fund is also China-focused, a core-plus, opportunistic and value-added fund from Hong Kong-based Gaw Capital Partners, which raised US$1.025 billion with the Gateway Real Estate Fund IV.
This article appeared in the South China Morning Post print edition as Fund managers target Asian cash -- 2013 November 13
The Chinese are Everywhere - in property
Asian money accounts for a significant proportion of turnover of new developments in Vancouver, Toronto, London and New York now.
And elsewhere in Asia:
China investment in Malaysia for $1.8 bln
PETALING JAYA - China-based developer Guangzhou R&F Properties Co Ltd is buying six plots of land in Johor Baru for a whopping RM4.5 billion (S$1.76 billion) from the Johor Sultan, making it a record deal.
The investment, comprising high-rise residential units, low-density housing, retail properties, offices, a hotel and a shopping mall, is the Hong Kong-listed firm's maiden overseas venture.
"Malaysia, with a sizeable Chinese community and favourable government policy attracting foreign purchasers, is well-suited for the first venture of the group outside China," said the company in a filing with the Hong Kong stock exchange.
It also said it came to the RM4.5bil consideration through direct negotiation with the vendor and that its board considered the price to be fair and reasonable, given the market condition in Malaysia, location, development cost and potential of the land.
The developer said it had paid a RM100mil deposit, which would be deducted from the first instalment payment of the consideration.
According to Zerin Properties' chief executive officer Previn Singhe, the estimated sellable floor area of about 3.5 million sq m worked out to a plot ratio of 7.5 times, which is considered high, given that the land is worth about RM891 per sq ft.
Previously, another developer from China, Country Garden Holdings Co Ltd, had bought 22.26ha in Danga Bay for RM376 per sq ft. Comparing both, Previn said the latter's plot ratio was lower at 5.22 times.
"This is very good for Malaysia. Not only would it spur (our) real estate sector, but there would also be spillover effects in terms of other industries such as education, tourism, agriculture and many more.
"We are now an investment hotspot for companies from China," he told StarBiz. >> MORE 2013 December 3
[HONG KONG] Capital-starved Asian hedge funds may have got the lifeline they've been waiting years for - investors from China, some of whom are willing to risk very large sums of money.
This new source of capital is a potential game changer for an industry that has been dependent on the whims of US and European fund flows.
It may also represent a key turning point in the movement of Chinese wealth offshore as the world's second-biggest economy becomes more flexible about inbound and outbound investments.
Up until recently Chinese capital was barely noticeable, industry sources say. But this year more than half a dozen firms in Hong Kong, mainly investing in the Greater China region, have gathered at least US$500 million from mainland investors, calculations based on information provided by sources show.
The Chinese Acquisitor
Launch of Sky Vue in Singapore
First hand from the Creative Team in the trenches launching this pre-sale of Sky Vue by Capitalland and Mitsubishi Real Estate. Well done, Fiona! ... >> MOREHere was the scene in Hong Kong
when Victor Li was clever and sold off units in Apex Horizon during spring of 2013.
PUBLISHED NOVEMBER 02, 2013
Is easy money fuelling new property bubbles?
Home prices are rising in several markets, prompting regulators to act
FROM China to Canada and London, fast-rising property markets are haunting the global economy again, five years after the US sub-prime mortgage bubble burst and triggered the worst financial crisis since the 1930s.
For now, house price inflation is neither as high nor as widespread as it was in the middle of the last decade. Except in a few cases, the warning signals are flashing amber, not red, and several countries have acted to cool overheating markets.
But the confidence of policymakers that they can avoid another generalised boom and bust could be tested if central banks keep pumping out nearly free money to support economic growth by encouraging investment in riskier assets such as equities and property.
Home hunters from China are becoming a force to be reckoned with in Singapore, and their presence could grow further as the authorities on the mainland and in Hong Kong clamp down on real estate speculation.
This proportion is the highest since official data was available from 1995.
The Chinese became the second-largest group of non-Singaporean buyers, on a par with Indonesians.
Malaysians took top spot with a 21 per cent share, and Indians ranked fourth with 14 per cent.
On the whole, foreigners and PRs accounted for 23 per cent of the 7,888 private-home transactions in the third quarter.
Singaporeans bought the majority of homes and had a 73 per cent share. Companies were involved in the remaining 3 per cent.
The presence of Chinese buyers has grown significantly since 2007, DTZ said. Just a quarter earlier in Q2, they made up 17 per cent of non-Singaporean private home buyers, coming in third behind Malaysians and Indonesians.
Their share of transactions 'may go up further as recent property market curbs in China could prompt more mainland Chinese buyers to turn their attention overseas', DTZ said.
The Chinese government has introduced a raft of rules to cool the property market in the last few months. These include a suspension of mortgages for third homes, higher interest rates, and larger down payments for homes. A property tax is now said to be on the cards.
Hong Kong has also stepped up efforts to weed out property speculators.
Just a few days ago, the authorities imposed a special stamp duty on property transactions with short holding periods - those reselling their properties within six months would be taxed as much as 15 per cent of the total transaction amount.
Chinese buyers are probably expecting limited upside from investing in property at home as more measures come into play, said Credo Real Estate executive director. As a result, some of them could turn to Singapore.
Anecdotally, quite a number of Chinese also buy property in Hong Kong, so rule changes there would also have an effect, he added.
Savills residential director agreed that policy tightening on the mainland could lead more Chinese property buyers here. But she pointed out that many purchase homes in Singapore not so much for investment, but because they become PRs or have family members studying here.
'Singapore is one of those cities that they are comfortable with,' said Knight Frank managing director (residential services).
A number of them become acquainted with the property market here through their private bankers or local developers with offices in China, such as Far East Organization, he added.
The topic of foreigners buying property in Singapore is a touchy one, especially at a time of rising home prices. Singapore has introduced several measures to keep the property market stable since September last year.
On Monday, Finance Minister Tharman Shanmugaratnam said that 'the government will continue to monitor the situation closely and take additional steps, if necessary, to ensure financial stability and sustainable asset markets'.
Most property consultants do not expect the authorities here to tighten policies as sharply as Hong Kong did - at least for the time being. The rate of price escalation for non-landed private homes has slowed in the third quarter and the government may wait to see how prices move for the rest of the year, said Credo's Managing Director.
The market will be watching CapitaLand's launch of D'Leedon closely for signs of where private home prices are headed. A preview of the project is said to be taking place this week, with asking prices mostly above $1,600 per square foot. - 2010 November 24 SINGAPORE BUSINESS TIMES
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