Allianz Real Estate aims to increase China investment

Firm has bought Beijing office tower, and will focus on new economy and logistics sectors

HONG KONG • The property investment arm of Germany's Allianz SE expects China to account for up to half of its Asia-Pacific fund allocation going forward from 40 per cent now, with focus on the new economy and logistics sectors, a senior executive said.

The insurer and asset manager said yesterday it bought an office tower in a Beijing software park that was fully leased to Chinese tech firms.

It expects to complete another purchase in a Shanghai business park "within a couple of weeks", said Mr Rushabh Desai, Asia-Pacific chief executive at Allianz Real Estate.

"We want to be aligned to the new economy and contribute towards China's growth in the sector; we are investing based on that thesis," he said in a recent interview.

New economy refers to non-traditional industries such as biopharma and online retail.

Allianz Real Estate is just one of many foreign investment firms betting on growth in the commercial property markets of China's top-tier cities, driven by high demand from small start-ups to large corporates.

Allianz Real Estate is just one of many foreign investment firms betting on growth in the commercial property markets of China's top-tier cities, driven by high demand from small start-ups to large corporates.

The firm bought 98 per cent of the Beijing office tower - dubbed ZLink and valued at US$185 million to US$195 million (S$250 million to S$264 million) - in an all-cash deal from private equity firm KaiLong Group and Goldman Sachs Group, Mr Desai said.

The ability to pay without financing and close the deal in eight weeks helped Allianz Real Estate secure the property, even though it might not have been the highest bidder, he added, as sellers prefer to avoid China's lengthy financing periods.

He said the firm will look for opportunities in Beijing and Shanghai office space, as well as in warehousing. Its portfolio includes co-investing in two Shanghai office towers.

Allianz Real Estate is on track to meet its China portfolio growth target of over €1 billion (S$1.6 billion) at the end of this year, from around €800 million to €900 million at present, Mr Desai said.

Globally, Allianz Real Estate manages €56 billion worth of assets, of which 10 per cent is in the Asia-Pacific region, where around 40 per cent is in China.

Mr Desai said the trade spat between the United States and China has little impact on his firm's investment decisions, and that post-deal asset management is more important. "We monitor political risk but we keep it out of our investment decisions and try to focus on asset level," he added.

"As an asset investor, we look at quality of asset, quality of location and managers. We look to outperform the market, so even if there's a trade war or impact, we hope our investments will do better than our competition. That's all we try to do."

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 10, 2018, with the headline 'Allianz Real Estate aims to increase China investment'. Print Edition | Subscribe