DEBT FINANCE BRIEFING: Asian financiers slow to get off the ground in Europe

Asian financiers are starting to emerge in the European real estate sector but so far they have not made a big splash, PropertyEU's debt finance investment briefing in Frankfurt heard this week.

While Asian investors continue to target the UK and increasingly continental Europe, Asian financiers are still quite scarce and tend to cherry bick, according to Paul Dittmann, head of commercial senior mortgages at M&G Investments.

They look at propositions deal by deal, he added. 'We've seen the occasional Japanese financier in London, but only in London, and only in office and retail. The Koreans are big equity clients but we haven’t seen them as financiers. They have a need for 4% returns and they can get them domestically.'

Japanese financiers find the UK and European markets interesting due to the thin margins at home, but they are very cautious, Anthony Shayle, MD and head of global real estate and UK Debt at UBS, told the briefing. 'They are very slow and very meticulous and methodical and systematic. But our Japanese LPs (limited partners ed.) are also cautious. Frequently we see banks coming into our funds, but they have quite some demanding regulatory needs.'

Shayle is more upbeat about potential debt sourcing from China. 'A lot of money is coming out from China,' he pointed out. 'This is definitely an area we should look at from a long-term perspective. The Chinese could take a front seat if short-term money disappears from Europe.'

Asian banks have not been sighted yet in Germany, reported Daniel Mair, partner at EY's German restructuring practice. But Chinese real estate financing is definitely a topic for the next 10 years, he said. 'There are Chinese investors in London and Paris, and now Frankfurt and Berlin. Given the portfolio investment approach of Asian money, I'm surprised it hasn’t started yet...we're still waiting for them to come in.'

Earlier this year, it emerged that Hypo Real Estate Holding (HRE) is gearing up to divest its entire stake in pbb Deutsche Pfandbriefbank or to exit via an initial public offering. A sale could provide an opportunity for a Chinese bank, Mair said, but added that a Chinese pitch could throw up some political obstacles.