U.S. fund manager Franklin Templeton plans to launch a new Asian property fund of funds and hopes to raise about $300 million from institutional investors in Europe and Australia, a company official said on Thursday.
The new fund, which will invest across the Asia-Pacific region, aims to deliver investors an annualised return of 15 percent after taxes and fees, said Glenn U’ren, a managing director at Franklin Templeton Real Estate Advisors.
Franklin Templeton Real Estate Advisors, which has about $4.5 billion invested with about 90 funds globally, will earn performance fees if net returns exceed 10 percent.
U’ren said Franklin Templeton was currently looking to park money with private equity funds that specialise in buying non-performing loans tied to property investments in Japan.
Another area of interest was mass residential housing in China and India aimed at young and mid-level executives, while a third strategy was “asset repositioning” which involved buying poorly managed or poorly designed commercial property that the manager could improve.
“After 12 months, new strategies could arise,” he said.
U’ren added that he was wary of “high-end residential in any of China’s coastal cities”, given the sharp run-up in prices over the past 2-3 years.
But while segments of China’s real estate market appeared bubbly, there may not be a sharp correction as many investors had deep pockets and could ride out a downturn in the property market, he said.
“Unless you have to give your keys back to the bank, you are still in the game.”