An Omani investment company, a Cayman Islands fund, and a Chinese real estate developer have come together to launch a $400 million fund that will invest in China’s booming property market. Oman’s Amwal Investment and NCL Fund Management states the five-year fund will invest mainly in residential and retail properties in some of China’s fast-growing second-tier cities, where demand is high and competition minimal.
The logic is that nearly 20 million people are migrating to China’s cities each year to meet the demand for new jobs, and this migration is fuelling huge demand for new housing.
The ‘Wanyuan-New China Land Fund’ will be a Cayman Islands unit trust which will be managed by NCL Fund Management Ltd (NCL), a Cayman Islands corporation. The Bank of Bermuda, a wholly-owned subsidiary of HSBC, is the fund trustee.
The fund, which has a minimum subscription of $5 million for institutions and $1 million for individuals, expects returns of at least 15 per cent. Announcing it officials said that past experience suggests performance would be between 30 per cent and 40 per cent.
Shumin Zhu, chairman of New China Land Fund and Chinese real estate developer Wanyuan Group, said, ‘The increase in wealth, that translates into demand for new housing, is reflected by the astounding 1,700 per cent growth projected by 2010 for consumers who can afford luxury goods.’