This year, China’s domestic real estate has accelerated the pace of the establishment of private equity funds. According to the statistics from Zero2IPO Research Center, by the end of the third quarter of this year, 22 real estate private equity fund institutions in total have raised 3.225 billion US dollars (about 20.6 billion yuan), of which the number and the amount of the funds raised by the local institutions account for more than 80% and 70%, respectively. There are signs that, although China's domestic real estate private equity fund is still in its infancy, differentiation has taken place between fund management and investment strategy.
Two Co-Existing Real Estate Private Placements
According to the survey by the reporter of Securities Times, the current real estate private equity funds active in China market can be broadly divided into two types: one is the independent real estate private equity fund with CDH Real Estate, Prax Capital and Gaohe Investment as the representatives; the other is the real estate fund set up and raised by the fund management companies, which are established by the real estate companies.
Compare these two types of funds, it can be found that, the independent real estate private equity funds are good at the capital operation, and more experienced at the operation of real estate private equity funds; private equity funds of the real estate companies have a better understanding of Chinese real estate industry, in addition to its rich real estate resources, but its fund management is still in the early stages of development. The mode of “foreign support” management is rarely adopted.
At present, there are two types - “the introduction of foreign support”and “self-management” in terms of the management of the real estate private equity fundsset up by the China’s real estate enterprises.
According to the data from Zero2IPO Research Center, in 2010, WINS Investment, a real estate private equity investment institution of Gemdale (stock code：600383) established the “UBS & Gemdale- China Real Estate Development Fund I”in cooperation with UBS Real Estate Group, and both WINS Investment and UBS Real Estate Groupserved as the fund manager. It has raised 250 million US dollarsuntilthe second quarter of this year.
The manager of Zero2IPO Research Center said during an interview with a reporter, the introduction of well-known foreign institutions will bring international perspective to the local funds, which will also contribute to the introduction of those foreign institutions interested in the investment of China real estate industry into China market. However, the approach of “introduction of foreign support” is rarely adopted. Currently, local investment teams are solely responsible for the majority of the local real estate private equityinvestment inChina market.
Main InvestmentinHouse and Commercial Real Estate
According to the survey conductedby the reporter, as of now, a larger differentiation has taken place among the committed investment projects of China's real estate private equity funds. Sub-sectorssuch as commercial real estate, commercial housing, indemnificatory housing construction, tourism real estate and real estate for pension, have attracted the attention of real estate private equity funds. For example, the investment fundsraised by the Grand ChinaReal Estate focus on commercial housing market, mainly for the growing cities at Beijing-Tianjin-Tangshan, the Bohai Sea and Yangtze River Delta region with developed economy as well ashealthy and rapidly developed real estate.
Meanwhile, under the stringent real estate market regulation and control policy, part of the real estate private equity funds have turned their attention to commercial real estate, trying to grasp the opportunitiesfor the development of the office and shops market.
