CapitaLand closes $1.5bn China development fund

The Singaporean property group has closed its third China-focused development fund, with a major equity commitment from the Canada Pension Plan Investment Board (CPPIB).

Singapore-headquartered property developer and fund manager CapitaLand has closed its third China-focused development real estate fund at $1.5 billion.

The Raffles City China Investment Partners (RCCIP) III is said to be the largest private fund raised by CapitaLand to date, according to a statement released by the firm this morning.

Canada Pension Plan Investment Board (CPPIB) is one of the largest investors in RCCIP III. The Canadian investor has invested $375 million for a 25 percent stake in the vehicle. Other LPs in the fund include investors from Asia, North America and the Middle East. CapitaLand meanwhile will subscribe a 41.7 percent sponsor stake.

“Investing in CapitaLand's new China investment vehicle gives CPPIB the opportunity to expand on our long-term strategy of investing in high-quality commercial real estate in China to deliver solid risk-adjusted returns over the long term,” commented Jimmy Phua, managing director and head of real estate investments for Asia at CPPIB. “We are very pleased to extend our partnership with CapitaLand, one of our longest standing real estate partners in Asia, and one of the most highly regarded real estate companies in the region.”

RCCIP III will be invested in prime integrated developments in China’s gateway cities. The vehicle will have a life of eight years.

The fund is part of CapitaLand’s Raffles City China strategy, which also includes a $1.18 billion Raffles City China Fund that is currently invested in five developments, as well as a S$1.03 billion ($740 million; €680 million) vehicle that has been invested in a project in Shanghai.

On the investment potential in China, Lucas Loh, chief executive officer of CapitaLand China said: “China is a market with robust long-term investment potential with continued demand for property riding on the back of urbanization, economic growth, the rise of the services sector, a growing middle class, and rising domestic consumption.”

CapitaLand currently manages 16 real estate private platforms and five real estate investment trusts with over S$45 billion in assets under management