Blackstone Group, the world's largest alternative asset manager, is on track to make big-ticket deals in Asia's property market.
Stephen Schwarzman, a co-founder and chairman of Blackstone, said during a brief visit to Hong Kong on Friday that his firm would not quit the mainland's property market despite growing concerns about the outlook of the real estate sector.
The worries come after years of efforts by Beijing to check rising property prices and speculation.
Blackstone, already one of the largest property investors globally, raised a record US$13.3 billion this month for its seventh real estate fund for Asia and aimed to buy assets at "discount for size", said Schwarzman.
The fund's mandate was to make deals when acquisition targets were "below the trend", he said.
Conditions in Asian markets supported making large purchases, said Schwarzman, citing India, which generated double-digit returns on an unleveraged basis for the firm last year, while Australia also posted meaningful yields.
"We look for deals that allow us to add value by making improvements, and changes to an existing project," he said. Blackstone would not buy a building just because "it looks nice".
Antony Leung Kam-chung, Blackstone's Greater China head, said he was aware of some regulatory struggles between the various mainland government bodies that had become a factor in slowing approvals for fund-raising and deal-making by international private equity investors.
In April, the South China Morning Post reported that the financial community was concerned about two big regulatory agencies that were battling it out behind the scenes for control over the fast-growing private-equity industry.
The China Securities Regulatory Commission, the country's top securities watchdog, argued it should oversee private equity, while the National Development and Reform Commission, the top economic planner, contended it should police the industry.
More recently, even the tax authority on the mainland has been mulling some new rules about investment returns for the private equity business.
Leung, a former financial secretary in the Hong Kong government, said the private-equity industry on the mainland was still in its infancy and private equity investors there faced liquidity issues in the midst of an economic downturn.
Leung, who accompanied Schwarzman during his visit to Hong Kong, said valuation levels for private-equity investors on the mainland were now closely related with values on the public market.
Property valuations on the mainland had become more attractive "on the back of rising income growth and urbanisation, helping overall affordability", he said.