UBS plans to move into commercial property investment in China
Swiss bank plans to widen its investment on the mainland beyond residential while expanding into Australia's agricultural industry
UBS, Switzerland's biggest bank, plans to expand its property investment business with a move into commercial real estate in mainland China.
Office, retail and industrial properties were "where investor demand is certainly moving to" on the mainland, said Trevor Cooke, the head of global real estate for Asia-Pacific at UBS Global Asset Management. "The stock of investment-grade assets in China is growing at about 35 per cent per year."
He said the bank would either team up with a developer or a company with an ability to source existing assets.
Several mainland cities were expected to experience improving rental demand for commercial space on the back of recent regulatory changes, including policies to boost growth in certain areas, CBRE said in a report.
The mainland was among the five most-sought-after markets for retailers looking to open stores this year, the broker said in a separate report.
UBS already invests directly in the mainland's residential property through a joint venture formed in 2008 with Shenzhen-based developer Gemdale. The bank was planning a second residential fund, totalling at least US$350 million, Cooke said.
"It's hard not to acknowledge the macro sentiment around residential property in China right now, the concerns about a Chinese bubble," Cooke said. "But that just puts the emphasis on the asset management credentials."
UBS planned to offer clients the option of investing in the mainland's property market using either US dollars or yuan, he said.
The bank is also expanding in Australia through a joint venture with Melbourne-based developer Grocon and through an agricultural partnership announced last week with closely held agricultural advisory company Bydand Global Agriculture.
UBS Grocon Real Estate was targeting as much as A$750 million (HK$5.46 billion) of assets under management by the end of this year, including Grocon developments, Cooke said.
He said UBS would team up with Bydand to help match investor demand with farms in need of equity capital.
"The Australian agricultural sector is carrying too much debt, and a significant amount of farmers are subscale and need an exit," Cooke said. "Farmland provides a great portfolio diversifier and, structured right, it dampens volatility and initial demand from clients in all parts of the world seems very strong."