APG to Increase Asian Property Investments to Benefit From Regional Growth

Algemene Pensioen Groep NV, which manages about 250 billion euros ($321 billion) for the largest Dutch pension fund, said it plans to increase its real estate investment in Asia by 1 billion euros in three to five years as it seeks to benefit from the region’s economic growth.

The Netherlands-based pension fund manager, which has 4 billion euros of real-estate assets in the region, plans to invest in residential properties in emerging markets such as China and India, said Daan Van Aert, head of strategic real estate at APG Investment Asia Ltd., a subsidiary of APG. APG aims to increase its allocation in Asia to 24 percent of assets, from 21 percent, in the next three to five years, he said.

APG is seeking to profit from rising housing demand in emerging markets in Asia, the world’s fastest-growing region. Economic growth in China and India, the world’s most populous nations, will expand 10.5 percent and 9.4 percent this year respectively, according to the International Monetary Fund.

“When a country is growing and a middle-class is being established, you’ll see a huge number of people who need better quality, affordable housing,” said Hong Kong-based Van Aert in a telephone interview.

APG is the asset manager for Stichting Pensioenfonds ABP, the world’s third-largest pension fund, according to data from New York-based Pensions & Investments and Towers Watson.

China

China’s housing market looks attractive in the long run, Van Aert said, even amid government efforts to cool prices. A recent slowdown “is healthy because it gives more room for sustainable long-term growth,” he said.

Property prices in China rose at the slowest pace in six months in July and the value of sales fell 19.3 percent from a year earlier, the statistics bureau’s newspaper, China Information News, reported Aug. 10.

About 80 percent of APG’s real-estate investment in Asia is allocated to developed countries including Japan, Australia, Hong Kong, Singapore and Korea, said Van Aert. In developed Asian markets, APG prefers retail and logistic properties in Australia and sees Japan as less attractive, said Van Aert.

“We are currently bearish about further investment in Japan due to the economic climate and relatively low property yields,” said Van Aert. “We don’t see attractive market opportunities at the moment to expand further.”

APG started investing in real estate in Australia in 1998 and in other countries in Asia in 2003, according to the firm. It has 2.5 billion euros invested in listed real-estate companies and real-estate investment trusts, and 1.5 billion euros in private funds, joint ventures and co-investments, the firm said.

To contact the reporters on this story: Kathleen Chu in Tokyo at Kchu2@bloomberg.net

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