Invesco RE plans Asia fund for German investors

Invesco Real Estate is gearing up to launch an Asia fund for German institutional investors in Q1 2011, Robert Stolfo, Director of Business Development in Germany, told PropertyEU in an interview. The fund aims to raise between EUR 200 -250 mln in equity and will be registered as a Luxembourg-based spezialfonds, he added.

‘This new Asian vehicle will target Japan, China, Singapore and Australia,’ he noted. ‘Our research indicates that China is attractive for retail, Singapore and Australia for offices and Japan for offices and residential.’

The plans for the new fund follow hard on the heels of the launch of Invesco Real Estate’s second hotel fund and the launch and first closing of a UK real estate fund on behalf of German-speaking institutional investors in UK real estate markets. The UK fund is the third in a series for German investors and the new hotel fund is also expected to generate considerable interest from this quarter, Stolfo said. ‘German investors provided over 75% of the capital for the first hotel fund. The second is open to German and international investors and I expect this time it will be about half-half for each.’

German investors also accounted for about half of the capital raised for Invesco Real Estate’s Luxembourg-based pan-European core fund, he added.

Stolfo said there was strong interest from German institutional investors for indirect real estate holdings, in particular through more regulated vehicles like the spezialfonds which is open only to institutional investors. ‘It doesn’t necessarily have to be a German vehicle, it can also be a Luxembourg fund structure - as long as it is structured correctly and falls under the special fund investment regulations.’

But while demand for the German spezialfonds is expected to grow on the back of changes to the open-ended fund structure, investors are becoming more selective, Stolfo noted. ‘We’re seeing more investors like insurers or pension funds forming clubs with like-minded investors and looking for managers for non-discretionary vehicles. They had some bad experiences in the past as part of a club where the investors were not 100% like-minded. They want to avoid this sort of situation happening again in the future right from the start and want greater involvement from their side. That’s a relatively new trend. In the past, it was more or less the other way round.’

However, demand could be tempered by Solvency II, Stolfo said. ‘If the draft proposals come into effect, this could have a negative influence on the real estate investment industry in general. We are involved in discussions on the changes through INREV and need to monitor the situation carefully.’