JPMorgan could invest $1b in Asian property (en)

วันที่ 25 สิงหาคม 2551

JPMorgan plans to invest more than $1 billion in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and rival investors recoil from property markets.

The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to US subprime mortgage
mortgage investments, is using its special opportunities group to finance Asian property firms and their projects.

"It's a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet," the group's Asia real estate head, Bryan Southergill, told Reuters in an interview.

Many Chinese and Indian developers are struggling to complete ambitious projects because local banks have clamped down on lending to the construction industry and a stock market slump has closed off equity raising through initial public offerings.

Foreign Investors

Foreign investors are also shying away from markets where risks, as well as returns, are traditionally high. But because of a shortage of funds, developers are starting to offer plum deals.

"Last year many private equity players were clamouring for exposure in India and China but it was hard to get in," Southergill said. "Now, sellers' expectations have come down and what they're asking for is much more reasonable, but the private equity and hedge funds have really pulled back and are more cautious."

In China, the lending clampdown was inspired by a government bent on cooling a market where average home prices have doubled since 2002 and high-end apartments prices have risen much more.

Beijing has also raised interest rates, imposed taxes on capital gains and land appreciation, stopped non-residents from buying apartments and employed a "use it or lose it" policy to deter land speculation.

Southergill, who worked for Morgan Stanley's property investment arm before joining JPMorgan, struck a cautious note despite his ambitious spending plans.

"In the next three years we aim to invest north of a billion dollars in this part of the world, if market conditions allow," Southergill said, adding the investment would be split roughly equally between India and China.

"We're cautious about equity, aggressive on mezzanine financing, and we'll take our time during this period of market consolidation to build long-term relationships with companies we're going to invest with."

JPMorgan has taken two, $50 million equity stakes in Indian IPO-hopefuls.