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Real Estate Finance - Investment in Asia Recommendations for a US Mutual Fund

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TIAA Real Estate want to invest in Asia. Where? What? How? Market & Financial Analysis and recommandations.

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Real Estate Finance - Investment in Asia Recommendations for a US Mutual Fund

  1. 1. Real Estate Finance<br />Investment Opportunities in Asia for TIAA Real Estate Account<br />1<br />Real Estate Finance<br />MS SMIB /FEA– February 2011<br />Study by: Bruno RAKOTOZAFY, Nicolas de FERAUDY, Gaël COUNILLON<br />Florence OPIGEZ and Bastien DELESCOT<br />
  2. 2. Investments in Real Estate<br />TIAA-CREF<br /><ul><li>400US$ billion full-service US financial group
  3. 3. Two mains activities: insurances for public sector and retirement fund (the Real Estate Account is part of it)
  4. 4. Long-term investments preferred: non speculative group
  5. 5. Real Estate Account: 75 to 85% investment in Real Estate
  6. 6. Well diversified un the US (region/property type) but not present worldwide
  7. 7. Looking for some investment opportunities abroad in order to diversify and spread risks.</li></ul>Introduction<br />S:CONSEILCABASSON Anne-LaureChampagneBollinger3. PrésentationBollinger - Présentation - 281209.ppt<br />2<br />
  8. 8. Real Estate Development (US$ Billion)<br />Evolution in price indices (%)<br />China<br /><ul><li>Relatively recent market but quick development
  9. 9. Highly competitive nowadays (more than 200 real estate related companies)
  10. 10. Continuous growth since 2002 in Real Estate Development (2009 to 2010: +33%)
  11. 11. Development mainly finance by self-raising funds (37%)
  12. 12. Continuous increase in prices also</li></ul>Markets Overview (1/x)<br />S:CONSEILCABASSON Anne-LaureChampagneBollinger3. PrésentationBollinger - Présentation - 281209.ppt<br />3<br />
  13. 13. Is there a bubble? Is it going to burst?<br />China (cont’d)<br /><ul><li>After the 2008 crisis, boosting plans proposed by the Chinese government
  14. 14. Consequences more important than expected
  15. 15. High rise in prices, fear of bubble burst
  16. 16. New policies in 2010 (i.e. prohibition of acquisition of a second RE asset in Beijing for one family)
  17. 17. Regulation-sensitive market.
  18. 18. Back to normal expected in Beijing. Increase in prices in 2nd tier cities</li></ul>Markets Overview (2/x)<br />S:CONSEILCABASSON Anne-LaureChampagneBollinger3. PrésentationBollinger - Présentation - 281209.ppt<br />4<br />
  19. 19. 5<br />Office building (sqft) in Tokyo<br />Tokyo stock exchange REIT Index (pts)<br />Japan<br /><ul><li>Japan has been highly impacted by the crisis
  20. 20. Governmental stimuli in order to boost this sector (interest rates and tax deductions)
  21. 21. Low records in 2008/2009 in new constructions
  22. 22. Renting prices, land prices and occupancy rates seriously decreased
  23. 23. Some opportunities (volatile class A buildings, undervaluation of J-REITS)</li></ul>Markets Overview (1/x)<br />S:CONSEILCABASSON Anne-LaureChampagneBollinger3. PrésentationBollinger - Présentation - 281209.ppt<br />
  24. 24. ICICI Real Estate Fund is part of ICICI Venture<br />ICICI Real Estate Fund<br /><ul><li>First real estate fund in India (US$ 562 million). Supported by the second-largest bank of the country.
  25. 25. Very diversified portfolio (office, mall, hospitality and residential properties).
  26. 26. Strategy of investment in economically strong and growing Tier I and Tier II cities.
  27. 27. High risk mitigation management. Allow to provide long term benefits.
  28. 28. ICICI Real estate returns: TO BE COMPLETED
  29. 29. In the future:</li></ul>Create a 50/50 joint venture with ICICI Real estate Fund to invest in Pune(Tier II city).<br />Booming supported by IT industry. Opportunities of investment in offices and residential properties.<br />Invest in an Indian Real Estate Fund to understand the market<br />S:CONSEILCABASSON Anne-LaureChampagneBollinger3. PrésentationBollinger - Présentation - 281209.ppt<br />6<br />

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