A real estate fund that once managed around 2.8 billion yuan ($US448 million) and focused on Chinese properties has halted operations and is now looking abroad.
Fund management firm Harvest Real Estate Investment, run jointly by Beijing-based asset manager Harvest Fund Management and London-based Grosvenor Fund Management, is halting its investments in China. Harvest Real Estate is switching its focus to investing Chinese money in real estate outside the country, said James Raynor, chief executive officer for Grosvenor Fund Management.
Harvest Real Estate has also stopped fund raising for a planned $US500m dollar-denominated fund, called HREI China Total Return Fund, he added.
"We needed to balance where we felt the greater opportunity is going forward, and outbound was what we wanted to focus on," said Mr Raynor, adding that Grosvenor still considers China a positive long-term market.
Mr Raynor said Harvest Real Estate will cut some positions, though he didn't release details. In 2012, HREI had a team of 20 staff based in Hong Kong and Beijing.
More Chinese investors are looking to invest in real estate abroad, driven by high prices at home and a desire to diversify. Chinese outbound investment in commercial real estate reached $US7.6bn in 2013, more than double 2012's $US3.3bn, according to data from Jones Lang LaSalle. Some investors say foreign markets offer more opportunity and cheaper financing.
Meanwhile, the broader Chinese property market appears to be softening along with the rest of the country's economy. Developers are cutting residential prices in small cities as economists warn of overcapacity. Many property companies are also facing tightening credit, lower returns, slower demand for homes and intensifying competition amid a deepening supply glut.
Rong Ren, who headed Harvest Real Estate Investments since its inception in 2012, has agreed to leave the firm, a person familiar with his plans said.
Mr Rong was formerly managing director at Harvest Capital Partners, a real-estate fund set up by state-backed conglomerate China Resources Group, until 2012. Despite the similar name, Harvest Capital Partners isn't related to either Harvest Real Estate or Harvest Fund.
The person familiar with the situation said Mr Rong's departure isn't related to turmoil at China Resources, where Chairman Song Lin was stripped of his position by Communist Party officials for "suspected serious violations of discipline and law."
CEO still sees China as a long-term positive.
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