BPE Asia in HK$1.6bn Hong Kong luxury development

The real estate investment division of Asian private equity firm Baring Private Equity Asia has formed a partnership to develop luxury properties in the island-city.  

Baring Private Equity Asia Real Estate, the real estate investment division of Baring Private Equity Asia, one of Asia’s largest private equity firms, has formed a joint venture partnership with Hong Kong-listed developer National Properties to invest in Hong Kong’s luxury residential property market.

The value of the deal is approximately HK$1.6 billion (€190 million; $206 million), according to an announcement made on the Hong Kong Stock Exchange. BPE Asia is understood to have made the investment via BPE Asia Real Estate Fund, the firm’s maiden real estate fund in the region that was closed on approximately $365 million in the final closing in March this year.

BPE Asia is partnering with the Hong Kong-based developer, a subsidiary of National Electronic Holdings Limited, to construct seven luxury detached houses in the Island South district of Hong Kong. The properties to be built in the Tai Tam area will spread over an area of 32,390 square feet.

“Along with my partners Charles Lam and Malcolm Lai, we have previously completed two projects with National Properties, which were very successful developments. Hong Kong is one of the most robust financial centers in the world and there remains strong demand for luxury housing against a backdrop of limited new supply. In our view, National Properties has created some of the highest quality landmarks on Hong Kong Island and we are honored to be partnering once again,” said Mark Fogle, managing director and head of real estate for BPE Asia.

The construction work for the development project has started and the first show house is expected by mid-2017.

On the opportunity for investments in the island-city’s residential market, Charles Lam, managing director of BPE Asia, said: “The Hong Kong residential property market is unlike any other gateway city in Asia. Hong Kong has a population of approximately 7.5 million people of which approximately 1.4 million live on Hong Kong Island, yet there are less than 750 single family detached or semi-detached houses located within developments of eight homes or less. Furthermore, we estimate that there is an average supply of less than 15 such houses coming to the market per annum over each of the next three years.”

This joint venture partnership represents the fourth investment made via the firm’s maiden Asia vehicle. In November this year, the firm underwrote $75 million of a $150 million investment in a large office development in Clark, an emerging business district in the Philippines, in what is its biggest investment in the region to date.