Europe’s Axa Real Estate Investment Managers has agreed to co-invest in residential projects in China with the country’s second largest insurance company.
In a statement today, the Paris-based firm, which is part of insurance giant Axa, said a memorandum of understanding had been signed with Ping An to develop mid- to high-end projects and that the move was a ‘first step’ in China. The second step is to launch a China property fund.
Pierre Vaquier, chief executive, said Axa’s strategy was to remain committed to the Asian continent. He added the firm was a “strong believer” in teaming up with a local expert to access markets.
Of Ping An, he said it had “in-depth knowledge” and shared the same risk management approach to investing and corporate governance as Axa.
Song Chengli, president of Ping An, said the co-operation with Axa further enhanced “cross border sharing of experience”. “Both parties shall endeavour to make use of this co-operation opportunity to cast a strong foundation for longer-term strategic co-operation,” he added.
Frank Khoo, who heads up the Asia platform for Axa, said there was still a “big urbanisation story” going on in China, helped by a young and growing population, rising incomes, and still-low mortgage penetration rates. He added: “Unlike investing in affordable housing, the middle class realm allows for innovative designs to be incorporated in developments. In terms of the lower end of the spectrum, I do not think we can add value here. It is all down to price and margins are too thin.”