Nov 20, 2017
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Allianz to boost China property investment, launches mall fund

Nov 20, 2017

Allianz plans to boost real estate investment in China, announcing on Friday the launch of a $750 million fund that targets malls in major cities such as Shanghai and Beijing.

Allianz Real Estate, Allianz’s $63.5 billion property investment arm, launched the China-focused fund in partnership with investor TH Real Estate - Reuters

The German insurer and asset manager is betting high-end outlet shopping in China will continue to grow despite threats from online stores and a slowing economy.

Allianz Real Estate, Allianz’s $63.5 billion property investment arm, launched the China-focused fund in partnership with investor TH Real Estate. Allianz will be the anchor investor owning 30 percent of the fund.

“China will become one of the top markets for us in Asia,” Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, told Reuters in a telephone interview.

He expects to grow Allianz’s real estate portfolio in China to more than 1 billion euros ($1.18 billion) over the next 12 months, from around 760 million euros by the end of this year. Last year, the number was just 100-150 million euros.

Foreign investors such as Allianz remain optimistic about China’s real estate market despite Beijing’s tougher property curbs and a slowing domestic economy.

On Wednesday, Canadian asset manager Manulife Asset Management launched an investment unit in Shanghai, seeking to help foreign institutions invest in Chinese commercial real estate and infrastructure through co-investment deals. UBS Asset Management is also considering launching a real estate fund in China.

“Even if there is a slowdown, China still has 5-6 percent annual GDP growth, right? In my mind, 5-6 percent growth is still one of the best growth in the world,” Desai said.

He also sees limited threat from China’s booming online shopping, saying people don’t buy Prada bags via the internet.

“People are not buying branded products online; people are buying day-to-day stuff online from Alibaba.”

The new fund, which will initially acquire two malls, is part of Allianz Real Estate’s strategy to allocate about 5 percent of its global real estate portfolio to the Asia Pacific. The region will account for a little over 3 percent of its portfolio by the end of the year, up from just 1 percent last year.

It is also an expansion of the partnership between Allianz and TH Real Estate, with both sides seeking to replicate the success of their joint property investments in Europe and the UK.

TH Real Estate, the global real estate investment manager, is an affiliate of Nuveen, the investment management arm of TIAA.

($1 = 0.8469 euros)

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