Hong Kong: Morgan Stanley has raised the biggest property fund ever, an $8 billion (Rs32,800 crore) war chest, to invest in established global markets including Japan and Europe as well as emerging countries such as China, India and Russia.
The Morgan Stanley Real Estate Fund VI, supplemented with borrowing, would have buying power of more than $30 billion, the US investment bank said.
The move heralds an emergence of giant global property funds, with US private equity firm the Blackstone Group raising $10 billion for real estate and Credit Suisse Group planning a $2.5 billion fund.
Morgan Stanley, which issued a statement on the fund late on Wednesday in New York, has contributed 20% of the new fund’s equity.
Its portfolio would include real estate assets and companies from emerging markets including China, India, Russia, Turkey and Latin America, as well as developed markets including Japan, Western Europe and Australia.
Morgan Stanley became an active investor in Asia’s property markets by snapping up distressed assets in Japan and China, and has now moved into India by taking stakes in ambitious property developers.
Its deals are getting bigger. Morgan Stanley said last month it would buy Australia’s Investa Properties Ltd for $3.9 billion, picking up an office portfolio worth $3.4 billion.
In April, the bank’s real estate arm bought 12 hotels and two property management units from Japan’s All Nippon Airways Co.,Ltd for $2.4 billion.
Property markets have climbed almost across the board over the past three years, with global direct investment last year jumping 38% to $682 billion, according to consultants Jones Lang LaSalle.
But worries over US subprime mortgage loans, Spanish housing, tightening Chinese regulations, a slowdown in European property flotations and a weak debut by UK real estate investment trusts suggest the market could be at a turning point.
Morgan Stanley Real Estate has bought $83.5 billion of real estate assets globally through its funds.
Its last fund, MSREF V, closed in September last year with $1.75 billion inequity.