Indochina Land eyes US$1b for 2 new Vietnam funds

(LONDON) The property arm of Vietnamese financial services firm Indochina Capital said yesterday that it wanted to raise a minimum of US$1 billion for two new investment funds.

In a statement, Indochina Land said it planned to soon launch its third real estate fund, Indochina Land Holdings 3, as well as Indochina Infrastructure Holdings, which would invest in infrastructure projects such as rail transport and renewable power and in companies which promoted sustainable development.

Indochina Land – which manages London-listed Indochina Capital Vietnam Holdings Ltd – said it currently managed funds and development projects with a total value of US$1.8 billion in Hanoi, Ho Chi Minh City, and Vietnam’s central coast.

 

Source: Reuters (Business Times 13 Dec 07)

Global property investment expected to fall

Mortgage defaults in US may prompt lenders to tighten credit, says JLL

(TOKYO) Global direct real estate investment may fall this year as concerns about defaults on US mortgages prompted lenders to tighten credit, said Jones Lang LaSalle Inc, the world’s second-largest commercial real estate broker.

Asia may be the only market to experience an increase in investment in the second half of this year, Jane Murray, Asia-Pacific head of research at Jones Lang LaSalle, said in Tokyo yesterday. Global direct property investment rose 41 per cent in 2006 to US$699 billion, advancing for a third-straight year.

‘The highly leveraged players who were very active earlier in the year are certainly sitting on the sidelines at the moment,’ Ms Murray said.

The four-year boom in real estate is threatened after the US housing slump raised concerns about the value of mortgages and bonds linked to those loans. Investors are finding it harder to borrow money when they want to fund property acquisitions.

Japan, Singapore, China and India are among the markets offering the best opportunities for investors, according to Jones Lang LaSalle research.

Grade A office rents in Japan have gained 80 per cent in the past three years and have more than doubled in Singapore, Ms Murray said. Grade A buildings are no more than 25 years old, with total leasable floor area of more than 10,000 square metres and more than 800 square metres a floor, according to Jones Lang LaSalle.

Japan features strong economic growth in a large market and is the only country where returns on office buildings exceed local interest rates, also known as a positive yield spread, Ms Murray said.

Morgan Stanley raised a record US$8 billion for a real estate investment fund in June. In April the firm agreed to buy 13 Japanese hotels from All Nippon Airways in the country’s biggest real estate deal.

Japan offers a positive yield spread of 1.56 per cent, compared with negative spreads in other major cities including London, Paris, Frankfurt and New York, said Takeshi Akagi, local director in Japan for Jones Lang LaSalle.

Investment in China rose 23 per cent in the first half of the year even after the government sought to curb property investment to cool gains in housing prices. India, where more than half the population is under the age of 25, doesn’t have enough offices, shops and houses to meet demand, Ms Murray said.

‘It will require major additions to the stock base across every sector over the coming years to accommodate its rapidly growing services sector and the increasing wealth of its population,’ Ms Murray said.

‘When the Indian government begins to deregulate investment for foreign players, we will see a flood of money pouring into that market.’

 

Source: Bloomberg (Business Times 25 Oct 07)

Uganda housing shortage to continue

(KAMPALA) The demand for office space and quality residential accommodation will continue unabated in Kampala, the capital of Uganda, fuelled by a rising middle class and offshore interest and increased investments, a global property firm has predicted.

Britain-based Knight Frank’s Africa Report 2007, launched recently, said Kampala was short of office, retail, industrial and accommodation space as demand continues to outstrip supply. The report also provides a comprehensive look at the property environment in Africa.

‘Demand for office space has also increased from telecom companies and other related services,’ said the report, quoted by New Vision daily yesterday.

Kampala’s property market is attracting interest from abroad with offshore investors hoping to cash in on the rental yields that are higher in the region at 9 per cent for a 100 sq m apartment compared to Kenya’s 7 per cent and Tanzania’s 8 per cent.

Knight Frank said office prime rent fetches US$16 per sq m per month with a yield of 11 per cent, while a four-bedroom house in a prime location brings in US$5,000 in rent per month – a return on investment of 8 per cent.

Based on high rental yields on property in Kampala and across the region, Rutley Capital, a private equity arm of Knight Frank, has launched a fund to invest in east and southern African properties.

 

Source: Xinhua (Business Times 23 Oct 07)