Blackstone to Boost Property Investment in Asia, Schwarzman Says
Blackstone, the world’s largest private-equity firm, has been among the biggest buyers or property in Australia and India, Schwarzman told reporters in Hong Kong today. Yields on Blackstone’s commercial real estate investments in India are “in the double digits on an unleveraged basis” in the past year, he said.
As the economies of China and India cool, Blackstone is seeking to capitalize on property prices that have fallen from their peaks, Schwarzman said. China’s move to curb real estate speculation has cooled the market even as the world’s second- largest economy shows signs of improving.
“With slower growth and prices going down, we tend to be large buyers because we believe in the basic prospects of this area,” said Schwarzman. “The long-term direction in Asia, for the economies here, is strongly up.”
Blackstone this month closed its seventh vehicle dedicated to real estate investments with $13.3 billion, a record for opportunistic property funds, or those designed to acquire assets at a significant discount. Leon Black’s Apollo Global Management LLC (APO), the private-equity firm that is seeking to rebuild its real estate arm, is raising $750 million for a pair of funds that will focus on commercial properties in Asia.
Blackstone had 191 employees in the Asia-Pacific region at the end of September, a 20 percent increase since the start 2012, according to the company. The firm’s number of investment professionals jumped 25 percent in the period to 82.
In China, Blackstone hasn’t made any investments outside the property sector since the start of 2011, according to Asian Venture Capital Journal. The firm last year agreed to sell its 95 percent stake in Shanghai’s Channel 1 shopping mall to New World Development Co. in Hong Kong for 1.46 billion yuan ($234 million), people familiar with the matter said at the time.
“We may not be seen to be as aggressive in China as a lot of our competitors, but in the long run, that may be better for our investors,” said Antony Leung, Blackstone’s chairman of Greater China and a former financial secretary of Hong Kong. “Being conservative sometimes may not be a bad thing.”
Schwarzman said China’s economic slowdown has “hit bottom” temporarily and growth may rebound over the next two to three years. “This may be a very good timing opportunity for us to make investments,” he said.
Property valuations in China have become more attractive as rising incomes and urbanization drive demand, Leung said.
“The market is more reasonable,” Leung said. “We’re going to be a bit more aggressive, particularly on the real estate side.”
Blackstone reported a third-quarter profit of $621.8 million, as the value of its holdings gained at a quicker pace and its assets exceeded $200 billion for the first time, the company said on Oct. 18.
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