Partnerships Target China Market in 'Transformation'

BEIJING—Locally based Harvest Fund Management, China's second largest fund manager at about $37 billion in assets under management, is launching a JV with Grosvenor Fund Management. The newly launched Harvest Real Estate Investments is intended to help domestic and international investors locate real estate opportunities across the major sectors in Greater China.

In a statement, Harvest Group CEO Henry Zhao says the new venture is "an integral part of the Harvest Group's continued expansion into the alternatives sector and global capital markets." HFM will invest in the business through its alternative investments arm, Harvest Alternative Investment Group. GFM is the asset management arm of UK-based Grosvenor.

Leading the new venture will be Rong Ren, formerly managing director and CEO of Harvest Capital, no relation to HFM. He'll lead a team of 20 professionals based in HFM's Hong Kong and Beijing offices. Professionals from both GFM and HFM will join the dedicated real estate platform.

In an interview with the Wall Street Journal, Ren said China's real estate sector is going through a "huge transformation." Although investors tend to focus on residential, they're moving increasingly to other forms of real estate, including serviced apartments, logistics and warehouses, Ren told the WSJ.

Furthermore, Ren said, the fundamental growth story of China's real estate sector remains intact, notwithstanding the troubles developers faced this year as policymakers tried to curb property prices and tighten credit. He added that the sector would likely see a wave of consolidation, since "there are about 65,000 registered developers in China right now." That said, takeovers among Chinese developers are rare.

The announcement from HFM and GFM occurred as Reston, VA-based Calkain Cos. inked an exclusive partnership with Chinabased Platinum Investment Corp. to source deals in that market. Already, EVP David Sobelman told GlobeSt.com earlier this month, there is some $50 million of transactions in the company's pipeline. "This has been a deal long in the making; however, it's moving very fast for us," he said.

This summer, the National Association of Realtors reported buyers from China and Hong Kong were the second-largest group of foreign buyers of homes in the US for the 12-month period ending in March. Sobelman said demand for Calkain's services and expertise in China is being fueled by the countrys high-net worth investors. "These Chinese nationals are interested in US real estate and specifically in net lease properties."