Choy-Soon Chua, managing director of SEB Asset Management, is on the hunt for investment opportunities in Asia. In an interview with PropertyEU, he talks about his top picks and why India isn't on his list.
Choy-Soon Chua, managing director of SEB Asset Management, is on the hunt for investment opportunities in Asia. In an interview with PropertyEU, he talks about his top picks and why India isn't on his list.
PropertyEU: Where do you see the best investment opportunities in Asia and why?
Chua: We're active in markets such as Japan, China and Singapore as we see good opportunities there for our various global funds as well as our Asian-dedicated SEB Asian Property Fund. In general, we like the retail sector as it's been more resilient than the office sector in the region. Asians enjoy eating out and shopping centres tend to have a large food component, which helps draw in shoppers as well. Also, most Asian cities are highly urbanised and densely populated. In Asia we also invest in office and residential properties: SEB Asian Property Fund has two office buildings in Singapore, a shopping mall in Chiba, Japan, and a residential property in Tokyo. Other internationally-oriented SEB funds are invested in Malaysia, Japan and Singapore, their focus currently being on offices.
In Japan, we mainly invest in Tokyo because it's a very liquid market, despite the weaker macroeconomic picture. In China, we are interested in the residential and retail sectors in second-tier cities such as Dalian in northern China and Chengdu in western China, to name a few. The going-in cost is more attractive compared to the first-tier cities.
PropertyEU: What have you acquired in Asia this year?
Chua: We’re in the process of buying a shopping centre, although the deal hasn't closed yet, so I can't say much about it. But it's an equity investment of around EUR50 mln and it is a joint venture with other local partners. We're currently looking at some residential and office possibilities in Tokyo. Last year, we looked at several office and residential deals in Japan, where capital values for prime offices have fallen by 40% since their peak in 2007. We were pricing at pessimistic levels, which perhaps vendors found too low. That said, in December 2008, we bought a retail property in Tokyo for around EUR100 mln. Our SEB Asian Property Fund currently has a gross volume of around EUR600 mln. Also, earlier this month (September), we sold Cross Tower in Shanghai to a fund managed by Ascendas, a Singapore-based real estate company for an undisclosed sum.
PropertyEU: How do you expect the Asian market to develop over the next year?
Chua: I think we will see more flotations of real estate companies in Hong Kong, Singapore and China. Asia is already home to seven of the 15 largest publicly traded real estate companies worldwide. We might also see pan-Asian companies listing in Singapore as it's proven to be quite a liquid and deep market.
The full interview appears in the October edition of PropertyEU Magazine. Click on the link below to subscribe.