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SCMP Reporter

Graeme Torre

1986: Trainee surveyor for Clive  Lewis and Partners in  London.

1990: Associate director at DTZ  Debenham Thorpe, a sur veying firm in London.

1993: Moved to Singapore as di rector with DTZ.

1995: General manager of Hong kong Land.

1998: Head of Asia property in vesting at Henderson Global  Investors in Singapore.

FORMER SURVEYOR Graeme Torre is building himself a new career as a property specialist fund manager.

The Briton has the job of giving Henderson Global Investors a regional edge in the sector.

'We have decided that the expertise we have in property equities is a valuable service and we have had a lot of interest from institutional clients,' said Mr Torre, who is based in Singapore.

Henderson started up its first specialist Asian property equities portfolio for a European institutional client in July.

Mr Torre also takes care of the property segment of Henderson's regional funds and has US$100 million under management.

His role goes beyond equity markets, however; he even trades property directly for Henderson.

The house, which is the fund management arm of Australian financial giant AMP, set up a joint venture with Singapore's Keppel Land in 1998.

'Asian property markets are almost entirely down to the art of timing,' Mr Torre said.

'We decided that after the 1997 debacle there would be an opportunity for capitalising on the market cycle. It could be anything from buying a floor in Lippo Centre to buying apartments in prime residential areas.'

The most ambitious project to date for the joint venture has been an 800-unit development in Pudong, Shanghai. The first phase sold out at 500 yuan (about HK$468.60) per square foot.

'The second phase we had people queueing overnight to reserve [a unit],' said Mr Torre. 'The majority of those reservations have now become confirmed sales with contracts signed.

'That project is aimed at the domestic market. We are getting middle-income professional buyers who want to buy their first home. We see that demand being very deep so we are keen to do further projects of that nature.'

Mr Torre's industry experience and his work on direct property investing will keep him a step ahead of generalist fund managers, he believes.

'When the markets are doing well, the level of intelligence we have in the markets and our levels of participation help us pick the stocks that are going to outperform,' he said. 'If there are lots of deals going on, we know about them before the general market.'

That inside knowledge has led him to believe the Hong Kong market is becoming 'polarised' by the influence of cheaper alternatives just over the border.

'We will probably see New Territories become more closely linked with the Shenzhen market and then we will see the urban residential market, [that is] Kowloon peninsula and Hong Kong Island, take a slightly different path in terms of their asset value growth,' he said.

The fund manager recently completed a fact-finding mission in Shenzhen and found flats with two or three bedrooms, fitted kitchens and marble bathrooms going for HK$900 per sq ft.

In contrast, units at an equivalent New Territory development, Caribbean Coast, were recently offered at HK$2,100 per sq ft, which 'everybody considered very cheap'.

'From what I understand from the sales staff at these properties [in Shenzhen], something like 70 to 80 per cent of units that have been sold are to Hong Kong purchasers,' Mr Torre said, estimating 6,000 Shenzhen flats had been bought by Hong Kong purchasers in the past 12 months.

'You could argue that some of those people would never have been able to afford a property in Hong Kong,' Mr Torre said. 'But it is undermining the lower end of the market in Hong Kong and that would be the New Territories. I think there will be some correlation between prices in the New Territories and Shenzhen in due course.'

With that in mind, Mr Torre is steering towards Cheung Kong (Holdings) and Amoy Properties because their portfolios are skewed more towards the urban end of the market.

As for the firms on the wrong end of the stick 'it is no secret'.

'Most people identify Sun Hung Kai [Properties, SHKP] and Henderson [Land] as having most exposure to the New Territories,' Mr Torre said. 'I think most people would consider Henderson to be carrying the greatest exposure. Sun Hung Kai has quite a balanced portfolio.

'They have got a lot of residential but they have got quite a lot of office space and other property on the island which might perform a bit better.'

But should Hong Kong's lacklustre property market finally get into gear, SHKP could trade up to just beyond net asset value (NAV), while other counters might see their discount to NAV narrow to 15 per cent to 20 per cent.

'Sun Hung Kai cannot do any wrong in the eyes of many investors,' Mr Torre said. 'Up to now they have been focused purely on Hong Kong. They are seen as the home team.

'They are the ones who always seem to pick the best products and best sites. The management has a good track record. The institutions consider it the proxy on the market. If you want to put money in property, the first name that comes in your head is Sun Hung Kai.'

Bulls have been making the case for property. Hong Kong interest rates are at a record low, there is a positive carry on rental yields and prices have fallen 60 per cent since the Asian crisis in 1997.

'Conventional wisdom says 'why isn't the market falling over itself to buy property'?' said Mr Torre. 'Well nobody seems happy about committing themselves to a 25- or 30-year loan if they don't know if they are going to keep their job or if their salary is going to continue to go up. It is the same story in Singapore, that market has stagnated as well.

'Everyone is waiting to see what the United States consumer does and what their economy does,' Mr Torre said.

Positive factors could kick in with a vengeance once consumers started to feel more secure.



Surveyor sizes up property