Tse, a former property analyst at Morgan Stanley, recently joined Aetos Capital to head its real estate fund team targeting China property sector.
Aetos Capital Asia, managing US$11 billion assets, is the newly established Asian arm of US Aetos Capital. The firm manages US government funds and large pension funds including the California Public Employees’ Retirement System (CalPERS) and the Bill Gates Foundation.
‘There has been a lagged effect on the mainland property market resulting from austerity measures since 2003,’ Tse said. ‘Increasing transparency and a more regulated market through mergers and acquisitions during past years have made property a more attractive investment as the risk is lower.’
Tse said ‘Sustainable profit growth for mainland developers could be as high 20 percent to 30%. We expect the total market capital of overseas listed mainland property companies could jump to about US$100 billion from the current US$60 billion by the end of 2008.’
The huge potential market, driven by the enormous demand for housing in the mainland, has attracted more foreign funds and private equity investors.
Global property consultancy group DTZ earlier said earlier this year it will manage a US$400 million Middle East fund to invest in mainland real estate.
Aetos Capital and JPMorgan are other new participants in the bull run.
‘Foreign funds are more committed in the China property market these days by hiring local professionals to explore the market,’ Tse said.
He believes the consolidation process in China has urged property developers to seek funds abroad. He said, ‘This is one of the reasons why foreign funds are flocking to invest in mainland property.’
Source: The Standard