Allianz Real Estate, on behalf of its investment platform AREAP Core, has acquired stakes in two assets – in Singapore and Shanghai – for a combined value of €645m.
The AREAP Core 1 fund, which is a 50:50 joint venture between National Pension Service of Korea (NPS) and the Allianz group companies, has acquired a 50% stake in OUE Bayfront in Singapore from OUE C-REIT for S$634m (€395m). It also acquired a 90% interest in Innov Star, an office property in Shanghai, for CNY2.2bn (€250m).
Rushabh Desai, CEO Asia-Pacific, Allianz Real Estate, told IPE Real Assets: “Both assets have strong long-term prospects and align with our strategy of seeking out high-quality assets in sought-after micro-locations. We are confident that these assets will attract strong tenant demand.”
QUE Bayfront is located on the waterfront at Marina Bay, the extension of Singapore’s central business district. “This is a marquee property and occupiers are willing to pay a premium to be located there,” Desai said.
Hyo-Joon Ahn, CIO of the National Pension Service of Korea, said NPS believed OUE Bayfront would be “a great addition” to an already strong and stable NPS real estate portfolio.
“Highest-quality real estate assets in irreplaceable locations prove resilient even in the current economic climate and provide long-term value and stable cash-flow,” said Ahn.
Desai said that, from a long-term perspective, Singapore was still well-placed as a destination of choice for multinational companies looking to establish a presence in Asia-Pacific.
“Singapore still stands out, because the occupancy cost is about 50%-60% of that in Hong Kong,” he said. “The gap might have reduced a little with the market softening in Hong Kong, but the city-state still offers attractive arbitrage.”
Desai said that this, coupled with a business-friendly government’s excellent management of the COVID-19 pandemic and a strong push for making Singapore an innovation and technology hub, boded well for the future. He added: “The future office supply is also at a manageable level”.
Of the Shanghai asset, Desai said: “This transaction is in line with our strategy to align our investments with the ‘new economy’ – technology and innovation – in China.” The three-building complex is located in Zhangjiang Hi-Tech Park, Shanghai’s premier technology and business park.
The closed-ended fund AREAP Core 1, which, with leverage, has an investment capacity of US$4.6bn, has completed four other deals since it was launched in June 2020.
Aside from AREAP Core I, Allianz Real Estate has partnered with a like-minded institutional investor to pursue Japan multifamily investment.
Desai told IPE Real Assets it was likely that Allianz Real Estate’s “invest-alongside Allianz” strategy would extend to core-plus and value-add strategy with other investors, possibly in the first half of this year.
“We continue to look at opportunities across the risk-return spectrum, including core, core-plus, value-add and opportunistic.
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