CapitaLand Investment (CLI) has launched two RMB-denominated single-asset real estate funds which have raised a combined RMB3.98bn (€554m) from Chinese investors.
China Business Park Core RMB I has acquired Ascendas I-Link, a business park in the Zhangjiuang Hi-Tech Park in Pudong, Shanghai, which was owned by a CapitaLand company.
China Business Park Core RMB Fund II will acquire a business park located in a Tier 1 city with strong fundamentals, quality tenants and close to 100% occupancy.
Simon Treacy, chief executive of CapitaLand Private Equity real estate, told IPE Real Assets investors in the new funds included securities companies, trust companies, state-owned enterprises and insurance companies.
CLI launched its first RMB700m property fund for the Chinese market in June which acquired a Shanghai office building.
“CLI is accelerating its onshore RMB capital-raising momentum at a time when it is becoming increasingly important for investment managers in China to build up domestic fundraising,” Treacy said.
Chinese institutions like insurers own real estate directly, but Treacy told IPE Real Assets Chinese insurers are increasingly outsourcing to external asset managers.
Last year Chinese insurer Ping An purchased partial stakes in six Raffles City malls scattered through various cities of China for RMB46.7bn. As with the assets in its three RMB private funds, CapitaLand is the asset manager for Ping An.
Treacy said that there has been tremendous interest and growth in RMB funds in China, and the domestic REIT market is developing more quickly than many realise. The commercial real estate sector continues to grow in importance, underpinned by the onshore RMB capital markets.
China’s commercial real estate market was the second-largest in the world after the US, and it had been growing at more than 10% annually, he added.
Today, just 5.8% of the assets managed by Chinese insurance companies – which are estimated at RMB23.2trn – are invested in real estate, said Treacy. By comparison, real estate accounts for between 8% and 12% of the total assets of US insurers.
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