While most institutions expect China to remain an important property market, they are not all on the same page when it comes to their shorter-term investment plans in the country.
Singaporean landlord Mapletree and Morgan Stanley Investment Management are among the investors looking to capitalize on the limited window of opportunities in the country.
“Gone are the days where people keep thinking of China as a workshop of the world. China itself is now a market that we cannot ignore,” said Tiow Chye Chua, deputy group chief executive officer at Mapletree, during a keynote panel at the 2023 PERE Asia Summit in Singapore last week. The manager has been in China since 2005 and has invested across different cities and property sectors in the country.
In particular, Chua saw long-term growth opportunities in the country’s logistics sector driven by the rise in consumption. The firm is understood to have recently closed an open-ended logistics fund in the country seeded by some of its warehouse assets.
Catherine Hong, managing director for the portfolio solutions group at Morgan Stanley Investment Management, is another firm that has been actively adding to its logistics portfolio in China in the past 18 months. “There’s continued to be a lot of liquidity from investors” in the Asia-Pacific region, she explained. It is also a market that offers exposure to attractive sectors like industrial that continue to have strong tailwinds, Hong added: “You cannot ignore China.”
On the other hand, some of their real estate peers are either pulling back or taking a wait-and-see approach to the country.
Stephen Tross, chief investment officer of international investments at Bouwinvest Real Estate Investors, said his organization has changed its views on China because of the country’s failure to condemn the Russian invasion of Ukraine as well as its increasingly hard-line stance on Taiwan. The Dutch investor sold its listed exposure and stopped making new unlisted investments in China, as he regarded the uncertainties over both Ukraine and Taiwan as “risks you won’t get compensated for.”
Graeme Torre, head of Asia Pacific real estate at APG Asset Management, noted the organization is taking a wait-and-see attitude towards the country due to “so much commentary” around the geopolitical situation in China. However, Torre thought APG is still under-allocated to the country in its real estate portfolio. “China is by far the biggest regional economy and second largest in the world, but we don’t have an equal weighting for the country in our portfolio,” he explained.
Meanwhile, Allianz Real Estate has a significant exposure to China and will focus on managing its existing portfolio during this period of uncertainty, according to Danny Phuan, head of acquisitions and head of China, Allianz Real Estate Asia-Pacific. “Allianz Real Estate is a long-term investor so we can see through the cycles,” he said. “For now, we want to get up to speed in terms of the ESG component in China, which is still fairly lacking in the market from our observation.”
Alessandro Fiascaris, senior vice president, head of investments – APAC, Oxford Properties Group, also agreed that China is an “important and essential element of the global economy,” although Oxford has yet to make any direct investments in the country. “The global economy cannot survive without China. Thirty to 40 percent of industrial capacity has to be there and it will be there forever,” he noted.