China goes Dutch

ING Real Estate is launching a second Chinafocused fund—and hoping to capitalize on the mainland's rapid urbanization.

Excited by the urbanization of mainland China, Dutch financial giant ING Group is launching a new private equity real estate fund to look at property investments in the Middle Kingdom. The firm's property arm, ING Real Estate, hopes to launch the $300 million (€252 million) fund by the second quarter of this year.

The fund would be ING's second fund investing in China and would focus on multiple development projects, targeting institutional investors in Asia, Europe and the US.

“The important thing is the long-term trend is still solid,” Dr. Robert Lie, chief executive officer of ING Real Estate Investment Management Asia, told the South China Morning Post in February. “We [think] China's strong economy and fast urbanization will be translated into demand for real estate.”

“We always say we will not be married to our properties”

The company would not comment further on the fund, but Lie told the newspaper that the vehicle would not hesitate to sell its assets upon completion. “We always say we will not be married to our properties,” he said. “We look forward to reinvesting the proceeds in the mainland market. We are looking at several deals in secondary cities now.”

The news about the fund broke as ING sold the Somerset Grand Shanghai, a 328-unit serviced apartment development in the city's Lu Wan district, to Concord Land of Hong Kong. The purchase price was not disclosed, but it is believed to be more than $100 million.

ING has plenty of experience in China, first investing in the country in 1996. The firm has invested in the Shanghai Racquet Club development, a 409-unit luxury complex that was completed in 2000 and is now fully let. In addition, ING has worked with Hong Kong-listed Shanghai Forte Land in joint ventures to develop properties in the Shanghai residential market. Most recently, ING and Shanghai Forte announced plans for a $74-million, 150,000-square-meter mixed-use development in Shanghai's Hongkou district, to be completed in 2008.

In 2004, ING's Asian real estate arm purchased Baring Capital Partners, the China operation of Baring Private Equity Partners. The move bolstered ING Real Estate's position in China, as Baring managed two property funds: a Beijing-focused, Hong Kong-listed vehicle and the China Property Development Fund, which held interests in two development projects in Beijing, comprising more than 4 million square feet of space.