Grosvenor, Harvest set up JV to raise funds to buy mainland property

Joint venture, HREI, to adopt strategies more suitable forage of austerity

PUBLISHED : Wednesday, 10 October, 2012, 12:00am
UPDATED : Wednesday, 10 October, 2012, 2:21am

Britain-based Grosvenor Fund Management and Harvest Fund Management have formed a joint venture that aims to raise funds to invest in real estate markets including the mainland, Hong Kong, Macau and Taiwan.

The joint venture, known as Harvest Real Estate Investments (HREI), will adopt a new investment strategy in the face of changing market conditions particularly on the mainland, chief executive Ren Rong said.

The mainland market is in a transformation phase at present, said Ren, partly due to prolonged austerity measures affecting property.

This called for a new investment strategy with a five- to seven-year horizon, he said.

Prior to joining HREI Ren was the founder and chief executive of Harvest Capital Partners, a real-estate fund set up by mainland conglomerate China Resources Group.

Ren said HREI will manage Greater China real estate strategies for investors globally, through the creation of both US dollar-denominated and yuan-denominated funds. The fund will also bring global real estate opportunities to domestic investors in China.

Both Western and Chinese institutions will be targeted as investors once the fund is set up, and Ren said he was confident that back-up from the fund shareholders, and a strong management team would attract investors.

Harvest Fund Management is one of the leading fund management companies in China in terms of assets under management.

It is 40 per cent-owned by China Credit Trust, 30 per cent-owned by Deutsche Asset Management, and 30 per cent-owned by Lixin Investment.

Commenting on the changing market, Ren said that with limited access to liquidity and the austerity policies, he thinks the changes to market practice are speeding up.

"The traditional way of getting a massive land bank and making huge profit from the land bank is going to be over. A land bank is a very expensive debt.

"Some will make some money. No one is going to make too much money just from the land bank, " said Ren.