SC Capital Partners Pte, a Singapore-based real estate money manager, is seeking to raise $400 million for a new Asia-focused property fund.
The asset manager will start marketing the fund next week to global institutional investors, Managing Director Suchad Chiaranussatti said in an interview.
“We are looking to provide long-term appreciation in the Asia-Pacific, which will be the main economic driver in the world,” Chiaranussatti, who founded the firm in 2004, said.
The fund expects to generate a net return of about 10 percent, which will include stable yields and capital gains, he said.
The U.S. was the largest source of global capital for commercial real estate investments last year at $65.5 billion, according to broker Cushman & Wakefield Inc. Canada was the second biggest followed by Singapore and China.
The fund will seek properties across Asia with 80 percent of investments primarily in “transparent, liquid markets” like Japan, Australia, New Zealand, Hong Kong, Singapore and South Korea, while the balance will be invested in China, Indonesia, Thailand, Malaysia and Taiwan, he said.
“China has opportunities, we are seeing more realistic pricing than we have seen in the last 10 years,” Chiaranussatti said.
China has a lot of assets that look cheap, though none are yield generating or the yields are very low, he said. Yields for Chinese commercial properties, currently about 4 percent in the major cities, should rise to about 8 percent to 10 percent as construction slows and developers lower expectations for assets they are selling, he said.
SC Capital’s investments generate yields from as low as 6.7 percent in Tokyo to as high as 10 percent in Australia, Chiaranussatti said.
SC Capital has already invested about $250 million of $850 million it raised earlier this year for its fourth fund, most of it in Australia, Chiaranussatti said. It expects to deploy as much as $400 million of that by year-end, he said.