Asia Property Blog
New website coming soon24/11/2011 AsiaProperty will be launching a new website in early 2012, which will offer much more functionality and a better experience for subscribers and other viewers. We will notify everyone on our mailing list when the new site is ready. For now, a Merry Christmas to all and we wish you a happy and prosperous 2012! Tan-EU hires chief investment officer3/11/2011 Tan-EU Capital has appointed Frank Xin as chief investment officer. He will be mainly responsible for sourcing transactions for Tan -EU’s SOTAN China Real Estate I fund, working in close collaboration with partner SOCAM Development. Xin will be based in Shanghai where Tan -EU Capital recently opened an office. He joins from Pingan Real Estate Investment Management Limited, where he was managing director and head of real estate investment, establishing a investment team which invested over $800m across China. Xin is a pretty good hire for a boutique outfit such as Tan-EU. The group’s links with Shui On clearly allow it to punch above its weight in hiring. CEO Rachel Tan likes to talk about her business as being a different model of fund management to the conventional norm and she does seem to be striking a balance between being a strong local player in Chinese real estate with Xin and SOCAM, while keeping European LPs happy with head of fund management James Buckley, who has a blue-chip CV with Schroders and Grosvenor. Tan has a foot in both hemispheres of course. ANREV launches Asia’s first property funds index1/11/2011 ANREV has launched the Asian non-listed property funds sector’s first index. The ANREV Index is only a consultation release, as it contains data for only 42 funds for 2010 and fewer for previous years. The index, measures annual net asset value-based performance taking account of the effect of fees and leverage, returned 9.8% in 2010. “It is interesting to have a set of performance figures for the industry as a reference point, but the more important achievement is this first step to providing investors with a reliable and meaningful measurement tool,” said Chris Reilly, director of property Asia for Henderson Global Investors, and chairman of the ANREV performance measurement committee. So far the index is not something that can be reliably used for benchmarking, and it will be a long time before it gets to that stage. However, it is an important first step and shows that ANREV is really living up to its remit, with the help of its ‘big brother’ organisation in Europe, INREV, where many of ANREV’s initiatives have already been trialled. As with all ANREV’s efforts, the key test will be the index’s adoption by Asian fund managers. The international managers are all INREV members and their adherence is a given. Getting Asian firms involved is a much harder task… AsiaProperty hits Expo Real10/10/2011 AsiaProperty hosted its first conference event ‘Europe meets Asia’ last week at Expo Real in Munich on October 5th. In partnership with Messe Munchen, the Expo Real organisers, we put on a day of panel discussions, discussing European investment in Asian and vice versa, plus panels on China, Japan and Australia. Panellists included John Saunders, managing director, Asia Pacific for MGPA; Ulrich Dischler, head of Asia Pacific asset management at Union Investment Real Estate; Richard David, CEO of Treasury China Trust; Richard Yue, chief executive of Arch Capital and Christian Mancini, CEO of Savills Japan. Attendance was good and audience participation strong. If the number of questions from the audience is anything to go by, Australia is a real focus of interest for German investors. Some interesting points came up in the day’s discussion, including:
CBRE Investors completes ING Asia takeover04/10/2011 CBRE Investors has announced the completion of its acquisition of ING Real Estate Investment Management Asia. Richard Price, who served as ING REIM’s Asia leader, will now serve as CEO of the combined company’s Asia Pacific investment management platform, overseeing operations in Hong Kong, Shanghai, Seoul, Singapore, Taipei and Tokyo. CBRE’s global investment management business is led by Matt Khourie. Price said: “We are pleased to be an integral part of the world’s leading commercial real estate organization. Our ability to originate sound, market-based ideas is now greatly enhanced, and this will be critical to our mission of achieving the best possible performance for our clients through market cycles.” With the completion of the acquisitions of ING REIM Asia and ING Clarion Real Estate Securities (CRES) (which closed on July 1, 2011), CBRE Investors’ assets under management1 now totals $63.6bn on a combined pro forma basis, as of June 30, 2011. CBRE has also acquired approximately $17.2bn of real estate co-investments managed by ING REIM in Asia. Closing this deal is a great coup for CBRE, putting them right in the top tier of global real estate asset managers. The real trick will be growing an already substantial business from this point… Stockland to sell industrial assets15/9/2011 Stockland is in talks with several companies for the sale of its A$1bn industrial portfolio with Goodman Group hot favourites to pick up the portfolio. Goodman has been one of the big successes in the Australian listed sector, leveraging its industrial specialism and its relations with investors such as Canada Pension Plan Investment Board, China Investment Corp and APG. Singaporean groups Mapletree, which has an industrial REIT, and GIC Real Estate are also bidding. In contrast to specialists like Westfield and Goodman, Stockland looks to be in rather sorry shape, having to sell assets in order to buy back its own shares. The share buyback will boost the share price but it is not the most positive of strategies. That said, if you can sell A$1bn of assets at book value and then buy shares in the company at a discount to net asset value then it is a logical step… Ikea expands in China7/9/2011 Ikea Group’s mall developer, Inter Ikea Center Group (IICG), is planning to open a fourth shopping mall in Shanghai. The new mall is expected to cost RMB4bn, and would come on top of the RMB10bn already allocated by the company to projects in China over the next 5 years. Its first 140,000m2 mall, in Wuxi, will open in 2013. IICG aims to open a second shopping mall in Wuhan in 2014, and a third in Beijing in 2015. The malls currently being developed are also to be expanded, on the back of increased demand from other tenants who wish to be sited by one of the Swedish home stores. Ikea’s success in China proves beyond doubt that there is enormous potential for retail real estate outside of the luxury sector. It’s not all Cartier and Prada… Rising rents Hong Kong rents hit small firms30/08/2011 After a long summer break, AsiaProperty is back in what is known as the blogosphere, terrible word though that is. We will be maintaining a blog entry once a week from now on. The price of a haircut at my regular barbershop will increase by HK$50 next month, which is quite a hike in anyone’s terms and will not be accompanied by any new or expanded services. The reason? Their rent is increasing by 80% (they managed to beat down the landlord from 82%), which is tough for a small business. In similar fashion, two of my neighbourhood bars have now closed because they cannot meet new rental demands; however there are still candidates to replace them so Hong Kong’s landlords have not priced themselves out of the market yet. However, many sense that we are close to a tipping point. Demand for space is not infinitely elastic. At the top end of the market, it might well be! Designer bag shop Longchamp is reported to be paying HK$7.5m a month for its new Tsim Sha Tsui store, which is a lot of handbags, even at their prices. However, with Mainland shoppers visiting in still-increasing numbers and shopping long and hard, it is not as easy to see when the market’s run will end. Ascendas mulls yuan REIT20/07/2011 Singaporean property company Ascendas is considering a yuan-denominated real estate investment trust as an exit for some of its investments in China. CEO Chong Siak Ching said the plan was one of a number of options. The market reception for Hui Xian REIT floated earlier this year by Cheung Kong was muted at best and it remains to be seen if the yuan REIT sector will be a winner, or simply another way for companies to offload assets. However, if Ascendas floated Chinese assets in a Hong Kong vehicle, it could be the start of a new sector of the listed property market. It would also be a big success for Hong Kong, which has sadly lagged Singapore in the listing and success of REITs. End of the road for DTZ?13/05/2011 DTZ announced this week that it had received bid approaches, including one revealed to be from French group Saint George Participations, which already owns 55% of the UK-listed property adviser. More details here. The plan is to take DTZ private and then sell it to BNP Paribas Real Estate, which has a European property advisory business. This would seem to spell the end of the DTZ name. Apparently BNP will then float its real estate business in about five years. It is hard to see why BNP cannot just make a bid now, with Saint George agreeing in advance to sell its stake. Minority shareholders might be curious about that too…. Back in the UK, people are not optimistic about DTZ’s future. In fact, one commentator writes about it being “put out of its misery” A great shame for a business which can trace its roots back to 1784. A great shame for the Asian business, which is arguably the strongest operator in Greater China. However, unwise expansion in Europe and the US by the firm’s previous management keep dragging the company back, despite the efforts of a new management team. On the positive side, there is no overlap between DTZ Asia Pacific and BNP, which has no business here. DTZ would add strength in research and consulting, plus it has a bigger investment management business – currently raising an Asian fund (not helped by this news of course). While it might be a shame to see DTZ go, no business or brand has a right to survive and the advisory business is increasingly polarised between the global giants and the niche players. Not entirely of course, Savills proves that there can be a profitable space between ‘everything, everywhere’ and the narrow specialist. However, unless DTZ’s management finds an alternative stakeholder, it looks like it will simply feed someone else’s global ambitions. |