Savills Investment Management has partnered with China Minsheng Investment Capital (CMI) to launch a European residential property fund.
The deal, announced in London by Savills chief executive Justin O’Connor and his CMI counterpart Terry Liu, will see CMI seed the new European fund with up to £30m (€41.5m), of which the majority will be invested into Savills Investment Management’s Prime London Residential Development Fund II (PLRDF II).
In addition to the seed capital diverted to PLRDF II, CMI will also invest a further £20m into the fund, becoming a limited partner.
Both companies hope the European fund will attract additional capital from Chinese and other international investors and expand into real estate markets outside London.
O’Connor said there were no detailed plans for the platform’s eventual asset under management target but that the partners would be “going forward cautiously, but very speedily”.
CMI’s parent company, China Minsheng Investment Corporation, was launched last May with RMB50bn (€7.2bn) in capital from nearly 60 Chinese investors, with CMU launched in last July to help deploy capital.
Liu told IP Real Estate the joint venture would act as a bridge between his firm’s capital and the assets available in the UK and elsewhere.
“I would like to introduce all the European markets to Chinese investors, and I hope this fund will continue [to] grow up and, in fund 2, 3 or 4, attract more [capital] aside from the Chinese market,” he said.
He added that it would also hopefully attract UK investors to China, and said Savills’s background in research was one of the selling points for the partnership.
O’Connor said the first European fund launch should be seen as one of a series of funds, and that Savills would be able to bring capital to projects in China or Europe.
“As Terry said, there is a bridge or a conduit in terms of capital – but obviously from us from then being able to invest in China,” he said.
O’Connor praised that, as a private institution, CMI would be able to act quickly when a deal arose.
“You could always say ‘we could do something ourselves’, but we both know that would take too long, and you might never get there if you try something yourself,” he said.
Savills has set a target net return of 15% for the first, European fund.
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