Allianz Real Estate has increased its exposure to China, acquiring a €1bn Beijing office complex through a joint venture with Alpha Investment Partners.
Allianz insurance companies will own 62% of the joint venture that is acquiring 85% of Ronsin Technology Center, an asset that encompasses six office towers.
The investment should increase Allianz’s exposure to Beijing by more than €500m at a time when the company is seeking to tilt its Asia-Pacific real estate portfolio towards the large growing markets of China and India.
Asia-Pacific CEO Rushabh Desai told IPE Real Assets that Allianz Real Estate intended for China to account for 30% to 40% of its exposure in the region, and for China and India combined to account for 50% to 60%.
Allianz Real Estate had €3.6bn of assets in Asia-Pacific as of the end of June this year, representing approximately 5% of its €67.1bn in global assets under management.
“We have taken stock of the impact of geopolitical volatility on occupational demand,” Desai said. “We are being very disciplined in what we buy and how we underwrite the investment.
“Having said that, we still believe in the long-term secular growth potential for China, and would like to continue to build our portfolio there.”
It is the second direct office investment in Beijing by Allianz Real Estate, following the purchase of 98% interest in ZLink in Zhongguancun last year, and Desai said it had hired a number of China experts this year.
It is also the second time that Allianz Real Estate has taken on joint asset management responsibilities for an asset in Asia-Pacific – the first being the Duo Tower in Singapore, which it acquired this summer through a joint venture with Gaw Capital.
“This transaction builds on a new dimension to our investment approach,” Desai said.
The remaining 38% of the latest joint venture is owned by Alpha Asia Macro Trends Fund III, a $1.1bn value-add vehicle that earlier this year bought the Yi Fang Tower in Shanghai with co-investment from German pension fund BVK.
Christina Tan, CEO of Keppel Capital, which owns Alpha Investment Partners, said it was the fund’s first investment in Beijing and was “in line with our strategy to expand Keppel Capital’s presence in China”.
D&J China, which developed Ronsin Technology Center, will retain a 15% interest in the 131,000sqm complex, which is in the Wangjing district of the city, home to technology companies.
“Beijing is demonstrating strong resilience to current volatility in the global markets,” said Desai. “Overall there is tight net supply and persistent demand, especially from technology and innovation firms.”
