Singapore: Global real estate investor LaSalle Investment Management plans to spend $15 billion to buy and develop property in Asia over the next three to five years, the head of its Asian business said on Tuesday.
Jack Chandler, Asia-Pacific chief executive officer of LaSalle Investment, said recent turmoil on global financial markets could slow some of the rapid price rises seen in the region by eliminating more speculative investors.
“I think Asian asset prices will be flat for a while and go down in some markets but I don’t think we’ll see the kind of corrections we saw in the UK or the U.S...In some ways, taking a little bit of liquidity out of the system is a very good thing for us as real estate buyers,” Chandler told Reuters.
The firm, a unit of property services company Jones Lang LaSalle Group that manages property investments of institutional investors such as pension funds and companies, has about $6 billion of real estate assets in Asia.
It plans to raise its holdings in Japan, China and South Korea while continuing to stay away from emerging markets such as Indonesia, Vietnam and the Philippines. “This year within Asia, we’ll probably invest $3 billion gross and sell $300 million,” Chandler said.
He expects direct investments in China to double to about $1 billion this year from last year while commitments for Japan would reach at least $2 billion this year via investments in the logistics, hotels and office-building sectors.
“We’re looking at Beijing, Shanghai and Guangzhou but also expanding to the less well-known cities. Hotels, offices, shopping centres are probably the sectors we’ll be most active in,” Chandler added.
LaSalle has about $900 million in Singapore real estate assets but Chandler was more cautious on further investment in the city state, where prime capital values have risen by more than 50 percent in the first half of the year.
“Singapore has been a tricky market. The values have gone up very quickly so the investments we made a year ago all look terrific. But the growth in capital values will slow and I think there is a lot more risk on the capital values side right now than a year ago,” he said.
Chandler also said there were no imminent investments in India, which has attracted other foreign developers such as Singapore’s CapitaLand and Dubai’s Emaar Properties .
“When you consider all the risks and issues, I don’t think you’ll get the commensurate returns in India right now,” he said.
LaSalle could sell some of its Asian assets into a real estate investment trust (REIT) that will be listed in either Tokyo or Singapore, Chandler said.
“At this point, we’re still exploring it. We’ve got large positions in Japan in the retail and industrial sector; we’ve got a large pan-Asian hotels portfolio...I think ‘08 would the earliest we’d think about doing something,“ Chandler said.
LaSalle manages a global REIT fund worth about $7 billion among its line-up of investment funds.
Chandler said market turbulence has slowed capital flows into the open-ended fund, which has about 30 percent invested in Asia and European property trusts with the remaining 40 percent in the U.S.
“I think we’re generally more optimistic about pricing in growth in Asia than the U.S. Continental Europe is looking interesting but the UK is not as interesting,” Chandler said.