Dubai-based investment firm Istithmar, which has a real estate portfolio worth around $7 billion - mainly in the United States - is planning big investments in Asia where it has little exposure, an executive said on Tuesday.
"We would anticipate making very considerable investment into the Asia region, perhaps in the order of 20 or 25 percent of the entire portfolio," Richard Johnson, managing director of Istithmar's real estate arm, told Reuters.
This would translate into $1.4 billion-$1.75 billion investment in Asia, he said, adding, however, that it was unclear yet whether this would be incremental investment or from proceeds from asset divestment elsewhere. Of the targeted Asia investment, China may account for 10-25 percent, Johnson said in an interview on the sidelines of a real estate conference in Shanghai.
"It would really depend on how effectively we are able to deploy our fund, but I would not be surprised if it was more than 10 percent. I would be surprised if it was more than 25 percent," he said. The planned Asia investment is aimed at diversifying the company's portfolios and tapping growth in the region, particularly China, he said.
Johnson said his company planned to open its first office in Asia by the end of June, probably in Singapore, and later would open an office in China, most likely in Shanghai. "I would be disappointed if we have not made an investment in China in the next 12 months. And I would be hoping to have opened an office either by the end of this year or by the end of the first quarter of 2008," Johnson said.
The company has started hiring people for its future Asia operations.
"Finding high quality staff is one of the major challenges to start an exercise like this. So we are focused at the moment on trying to find appropriate staff for our Asian offices," he said.
Istithmar, an investment firm owned by the Dubai government, is joining a growing number of foreign companies to invest in China's fast-growing real estate market. Many executives of overseas companies at the Shanghai conference expressed confidence in the long-term future of China's property market, citing its 8 percent a year economic growth, rapid urbanisation and an emerging middle class.
They shrugged off concerns about the government's recent measures to curb property speculation, saying the impact would be temporary and the market could still bring returns to long-term investors.
"This is an economy that is changing very dramatically for the long run ... We see long term fundamental growth in this economy," he said. In China, the company would likely invest in commercial properties such as shopping malls and residential projects through acquisitions, he said.
"Fundamental residential and retail growth is probably where we will start in China," Johnson said. "We are not necessarily looking for trophy properties. In fact that is probably not what we will be looking at," he added.