China’s Guangzhou-based Evergrande Real Estate Group (incorporated in the Cayman Islands with limited liability) has obtained $600 million in investment from several individuals and institutions.

Cheng Yu-Tung, a Hong Kong tycoon and chairman of New World Development Company, invested $150 million - 3.9%
Kuwait Investment Authority invested $146 million, 3.8%
Five investment houses including Deutsche Bank and Merrill added $210 million, 4.4%
$506 million of the total promised investment was paid by June 29, the rest following soon.

Apart this, Mr. Cheng Yu-Tung, seen here, will also provide RMB780 million for two projects co-launched with the Evergrande Real Estate.

Evergrande Real Estate said that the raised funds will be used mainly for payment of land leasing fees rather than banking loans, and the company plans to open more projects for potential partners.

In addition, the Evergrande is planning to raise money for another three projects in Guangzhou, Chongqing and Shanghai which will involve RMB8 billion for land purchase

Of the company’s 48 projects, three have been opened to other partners, including one in cooperation with Merrill Lynch.

Source: Trading Markets

Details on investment activity and transactions for the first half of 2008 throughout Asia have been released by CB Richard Ellis.

Demand has slowed from last year, but is still strong with core investors.

Highly leveraged investors have largely stepped out of the region’s investment markets due to the continued credit squeeze. Fnancially-sound investors remained generally positive on the outlook.

Overseas investors remained keen on acquiring investment properties in China, in spite of the increasing restrictions imposed on the entry of foreign capital.

Properties with offshore equity structures therefore have a significant advantage in the market as they enable investors to avoid time-consuming onshore approval procedures.

Larger developers are seeking to acquire smaller developers with attractively valued development land reserves.
Source: I-Newswire

Goldman Sachs, a leading global investment banking, securities and investment management firm, said in a recent research report that it retained its prudent attitude towards the real estate market in mainland China.

Perhaps we should get a definition of the word prudent: sagacious in adapting means to ends; circumspect in action, or in determining any line of conduct; practically wise; judicious; careful; discreet; sensible.

If that is what Goldman Sachs is suggesting it seems judicious, careful, discreet and sensible.

The report suggests that housing sales around the Yangtze River Delta region have another drop coming in the near future.

For the listed real estate developers used in this research, average housing sales for the first half of 2008 accounted for only 30% of the sales goal for the full year. Which means to make-up, sales have to be 70% in the second half which presents real estate developers with a tough challenge.
Source: Trading Markets

ING Real Estate, a unit of Dutch financial group ING, which has around $200 billion under management globally, is currently marketing a fund for China, which it hopes will bring in $750 million, mostly for building housing. Part of the plan is it expects troubled landlords and developers to offload bargain properties.

Many developers, struggling with a clampdown on bank lending and a dismal market for initial public offerings, lack the cash to finish projects and are expected to offload land and unfinished buildings.

ING, which already runs a $500 million fund in China, plans to continue working on projects with Chinese developers Shanghai Forte Land , Gemdale and Longfor, which wants to launch a Hong Kong initial public offering in the next three months.

Richard van den Berg, head of China for ING Real Estate, said, ‘You don’t turn the tables on your partners when the market turns in your favor.’

The China fund will target internal rates of return (IRR) of over 20%.
Source: Reuters

China could kick-start a property trust market next year to give its pension funds and insurers an alternative to volatile stocks and meager returns from government bonds, according to an industry group.

The move could lead to the listing of as much as $60 billion worth of buildings in the form of real estate investment trusts (REITs) over the next five years.

Stock market watchdog China Securities Regulatory Commission (CSRC) sent a delegation to Australia in May to study property trusts, and is working with other authorities including the central bank to draw up legislation.

The trusts will probably be externally managed, in line with the Singapore and Hong Kong model, said Peter Mitchell, head of the Asian Public Real Estate Association, which is advising the CSRC on the matter.

China is pushing ahead with REITs because insurers and pension funds are desperate for the stable returns they offer to match long-term liabilities. REITs tend to yield more than bonds, and offer capital gain if property values rise, but are typically less volatile than stocks.
Source: The Guardian London