REAL ESTATE - ING Real Estate is to launch its first fund in China later this year.

The firm expects to raise between $200m—250m (€163m—€204m) for the China Opportunities Fund from Asian, European and US institutional investors by June. The fund will invest in 12—15 office and residential developments, and commercial property deals.

According to senior director Richard van den Berg, ING is working with multiple “reputable and experienced” developers in “first- and second-tier cities”, including Beijing and Shanghai. “Geographic diversification and diversification across partners are key to the strategy of the fund,” he said.

ING is staking the fund’s success on its forecast for stabilization of the Chinese real estate market in 2006, with strong growth towards 2007.

“Our research has shown that the long-term growth trend in China is intact,” he added. “We see China's strong economy and fast urbanisation being translated into demand for real estate. This is especially so for mid-quality housing for the local Chinese.”

No details are available on the firm’s second China fund. “We are currently exploring our options but it is likely to be a fund geared towards investment properties,” said van den Berg. “As for whether it will be sector-specific or diversified in nature, we will consider that in the light of our commercial interests and the interests of our clients.”

Although the China Opportunities fund will be ING’s first fund in the market, its existing direct investments include premium residential projects in the major cities. It also has a minority stake in a Shanghai joint venture with Hong Kong-based Shanghai Forte Land.

In the long term, ING says it will consider launching a REIT in China. “We have a lot of experience with REITS,” said van den Berg. “In China, we are monitoring the progress on regulations. When the time comes for REITS in China, we will look into setting one up with our partners.”