LaSalle Investment Management, a unit of the world's second-largest commercial real estate broker, said it plans to triple its investments in Asia to US$20 billion from US$7 billion in the next three to four years.
The company plans to invest in markets such as Japan, China, Hong Kong, Taiwan, South Korea, Singapore, Thailand, Australia and New Zealand, said Jack Chandler, LaSalle Investment Management's chief executive officer in the Asia-Pacific.
"Our Asian funds have outperformed our internal rate of return of about 18 to 20 percent, and have done better than other regions" in the past three to four years, Chandler said in an interview in Singapore yesterday. "Investors have to have international real estate in their portfolio."
More than 100 real estate funds may raise a record US$69 billion this year as investors seek better returns than stocks and bonds provide, according to Private Equity Intelligence Ltd.
Morgan Stanley raised a record US$8 billion for a real estate investment last month, after announcing in April it was buying All Nippon Airways Co's 13 Japanese hotels in the country's biggest real estate purchase by an overseas investor.
LaSalle, a unit of Chicago-based Jones Lang LaSalle Inc, manages more than US$44 billion in real estate assets. The company began investing in Asia in 2000 and has six regional funds. Japan accounts for most of its investments in the region and will continue to be its biggest market, Chandler said.
"There's an unprecedented amount of liquidity directed at Asia, and we will continue to see funds flowing in, especially for Japan as the economy recovers there," said Simon Smith, head of research at Savills Hong Kong Ltd, a real estate consulting company.
LaSalle has two logistics funds in Japan, where the company developed and invested in warehouses for the past five to six years, Chandler said.
"A large part of it is because of the substantial investments that Japanese companies have made in moving their production to China,"he said. "Those goods have to be brought back to Japan and also moved elsewhere."
Japan's commercial real estate market, the second largest in the world after the US, is recovering from a 15-year slump that reduced the value of properties by as much as 75 percent. Rental income yields are still higher than the cost of borrowing, even as interest rates will most certainly go up, Chandler said.
LaSalle is ninth-largest property fund manager in the world, according to a survey last year by the European Association for Investors in Non-listed Real Estate Vehicles and Europroperty magazine.
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