[photopress:property_UBS_1.jpg,full,alignright]The Swiss bank UBS plans to launch a fund that will invest about $1 billion into Chinese property. This is a further sign of enthusiasm for Asia at a time when investors are nervous about European and U.S. real estate markets.
The deal for the fund was signed last month and the money will be used to build housing with Shanghai-listed developer Gemdale Corporation.
UBS is now looking to raise about $300 million in equity to finance the venture, which will include the bank’s own money as well as investment from its clients, and will be supplemented by debt to help lift returns.
Lijian Chen, head of China real estate for UBS Global Asset Management, said, ‘The focus is on residential, and we’re hoping to launch a vehicle, and we’re working on details. We’re targeting $300 million in capital overseas, with leverage, to give us roughly a billion dollars of buying power.’
UBS is following the likes of Morgan Stanley, Deutsche Bank’s property arm RREEF, and ING Real Estate, which raised a $350 million fund for Chinese housing last year and has partnered Gemdale on individual projects.
The UBS tie-up with Gemdale, which follows a similar deal in Japan with Mitsubishi Corp, is targeting 20% internal rates of return over an investment period of five years.