INREV conference: APG bets on China, India and Brazil

Dutch civil servants pension asset manager APG has no plans to invest in Russia’s property sector, real estate head Patrick Kanters told the INREV annual conference in Barcelona on Thursday.

‘APG has near zero exposure to Russia. We have always been negative about the country. We looked at it pre-crisis and didn’t want to invest there. We have a very small exposure to Russia and we are not planning to increase it any time soon.’

Kanters said the situation was different in China, India and Brazil. ‘We don’t have substantial exposure there, but we are active in these countries. In India, for example, we are quite active, especially compared to most of our peers as we had the ability to build a good exposure. But our presence is based on the prospects of urbanisation and demographics. We are not betting on economic turmoil.’

APG is currently looking to acquire an asset in Turkey, but Kanters said underwriting in the country remained ‘very complicated’ and that the Turkish lira remains very volatile. ’It is unlikely that we will enter in a sizeable way. One of the prerequisites for us is that our operations should be scalable. That’s why we like China, India and Brazil.’

M&G's overseas expansion
UK-based M&G only started investing outside the UK 20 years ago, its CEO Alex Jeffrey told the conference. ‘We do not go overseas for return enhancement, but for diversification and to make the overall return of the portfolio is more robust. We have always felt that when you go overseas you shouldn’t take on more risk in unfamiliar markets than at home.’

In Asia, M&G is betting on just five markets, Jeffrey said: Japan, Korea, Hong Kong, Australia and China. He added that the prospects for China were particularly good. ‘China could be become a core market in the next five years. In terms of reducing corruption and improving transparency, the country is not quite there yet, but it could develop.’

While China is not without risk, Jeffrey said the country was undergoing some fundamental changes. ‘China is fascinating, essentially it is a communist country, but it is introducing reforms in the financial area.’ He pointed out that 3.8 million new businesses were formed in China last year, double the figure for 2013. ‘Some profound changes are happening in China. Reforms are heading in the right direction.’