UBS Global Asset Management (China) Limited, Shanghai Hongkou Public Rental Housing Investment and Administration Co, LTD, Taiping Asset Management Co. Ltd and UBS SDIC Fund Management Company Limited (UBS SDIC) will establish China’s first investment fund to retain equity ownership in the public rental housing market in Shanghai. The private equity closed-end fund will invest in developed public rental residential properties in the Hongkou district, a prime residential community in Shanghai with strong rental demand.
Taiping Asset Management, a subsidiary of China Taiping Insurance Group Co., Ltd is the lead private investor in the fund. UBS Global Asset Management (China) Ltd and UBS SDIC are the fund's investment manager and advisor, respectively. The fund will be positioned for conversion into real estate investment trusts (REITs) to be publicly listed in China as and when the regulatory environment allows.
According to a senior official of Hongkou District in Shanghai, the innovative product will unlock the value of its fixed assets in the capital markets but, at the same time, ensure that the invested properties continue to be available for public rental. It is an innovative market reform initiative that will benefit all stake-holders, he added.
“Investors in the fund have access to a stable cash dividend payout as well as to potential asset appreciation. The fund is a working example of our ability to combine international expertise with local knowledge, “ said Xinyuan LING, China Chairman of UBS Global Asset Management.
“This underscores our commitment to broaden our business model in Asia Pacific, and the establishment of this new asset class in China is significant as the model lends itself to being rolled out elsewhere in the country to support the Chinese Government's public rental housing plan,” said Kai SOTORP, APAC Head of UBS Global Asset Management.
"Being part of such a high-profile initiative will give us the opportunity to apply our in-depth knowledge of the China residential market as well as our expertise in the area of real estate investment management in general," said Thomas WELS, Head of Global Real Estate at UBS Global Asset Management.
Under its 12th five-year plan, the Chinese government is seeking to build around 36 million social housing apartments between 2011 and 2015.
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