This real estate fund would rather invest in the Philippines than China
Bucking the trend of many property funds that have their sights firmly set on China, BPE Asia Real Estate is looking for gold elsewhere.
“There are still some uncertainties,” said Mark Fogle, managing director and head of real estate for BPE Asia, citing a glut and the economic downturn. “It may not be the right time to buy assets in China.”
Property consultants Colliers International estimates vacancies of Grade A offices buildings will this year run into double digits in tier 1 Chinese cities of Shanghai, Shenzhen and Guangzhou due to oversupply. Similarly high vacancy rates are also expected in Chengdu.
Fogle said the company has not made any investment in China as it has not been able to find assets that can yield attractive returns in the past two years.
BPE is an independent alternative investment adviser that operates a pan-Asian investment programme based out of Hong Kong. It has over 120 staff across seven offices in Hong Kong, Shanghai, Beijing, Mumbai, Singapore, Jakarta and Tokyo.
Its wariness over China apart, BPE sees good prospect in other countries.
“We have confidence in the Philippines. The country is changing dramatically and the middle class is growing rapidly,” said Fogle.
The nation’s gross domestic product expanded six per cent in the July-September quarter from a year earlier after rising a revised 5.8 per cent in the second quarter.
With strong demand of four million square feet of office space each year, the Philippines is a solid market for many big and multinational companies, said Fogle.
“Office occupancy of high-quality buildings is just 10 to 20 per cent of that in Central,” said Fogle.
But he said the company is still looking for opportunities in Greater China, including Hong Kong.
Last month, the company and National Properties, a subsidiary of Hong Kong-listed firm National Electronics announced the formation of a joint venture for the construction of luxury detached houses in Tai Tam, in Hong Kong’s southern district.
The proposed development includes seven luxury detached houses located on a site of about 32,390 square feet.
Fogle is optimistic about Hong Kong’s luxury residential market due to limited supply and strong demand from mainlanders.
In the first 10 months of 2015, buyers of four out of the top 10 luxury deals were from the mainland, according to property consultant Knight Frank.