2010AWARDS & AnnuAL REVIEW - PERE

oundtABle | AsiA
(L to R) Khoo, Brasse, Price and Ren: China’s policy becoming increasingly important
Sino watching
An excerpt from PERE’s Asia roundtable in november found participants focused as
much on events in China’s economy as those in the us
For the previous two years, PERE roundtable participants felt
obligated to temper their optimism about Asia’s growth story
with less-encouraging economic events transpiring in the
West. And with this year’s roundtable taking place one day
after the US Federal Reserve announced a second attempt to
resuscitate America’s flailing economy, it seemed the trend
might continue.
Indeed, news of the Fed’s plan for an additional $600 billion
in quantitative easing, dubbed QE 2, would have caused
serious ripples in 2009. Not so last year, as the participants
were more conscious about China’s economic policy.
“The amount of money the US government is pumping
into the system potentially has negative consequences for
all of Asia’s markets, specifically China,” said Richard Price,
chief executive officer for Asia at ING Real Estate Investment
Management (REIM). “But if you boil it down, what happens
to China is really going to drive what happens globally. If
the Chinese economy falls out of bed, then all bets are off
world-over.”
Rong Ren, chief executive officer of China-focused Harvest
Capital Partners, pointed out that reactions to the US
stimulus demonstrated just how Hong Kong, traditionally
an economic sentiment conduit between the West and East,
was becoming more closely pegged to Shanghai than New
York. “People are realising that Asia’s economies are now
more closely aligning with each other,” he said. “You cannot
divorce the East from the US, but the impact from the West
is becoming smaller.”
These macroeconomic insights kicked off a discussion of
the most pertinent topics and issues relevant to the private
equity real estate industry in Asia today. Price, Ren and a
58 PERE | 2010 AwArds & AnnuAl review
third participant – AXA Real Estate’s global head for Asia,
Frank Khoo – discussed investor appetite, investment trends,
financing and real estate market fundamentals, all of which
the US would barely figure into again. Instead, the one country
firmly melded into their narrative montage of insights,
anecdotes and metaphors was the People’s Republic of China.
Ren described global reactions to Chinese exports, a traditional
barometer for the health of the country’s economy,
to underline his point. “When Lehman Brothers collapsed,
China’s government was nervous about the effect on exports
to the West,” he noted. A member of China’s Central
Bank committee at the time, he recalled: “They questioned
whether people would still buy China’s products. One quarter
later, customs office data showed exports had increased
22 percent.”
Nobody at the table would say China has or would decouple
from the US. But with policymakers in Beijing wheeling
out measures to stem growth while their counterparts in the
West introduced stimulators, all were convinced they are in
the right region to ply their trade.
Even though real estate sits centre in China’s efforts to cool
its economy, each participant maintained that the country
remained firmly at the centre of their firms’ long-term investment
strategies. Furthermore, they weren’t perturbed by media
noise about bubbles, particularly in the residential sector.
“I’ve heard of apartments going for $23 million,” Price
said. “Those apartments are overpriced, but it doesn’t mean
there’s a bubble. We spend an awful lot of time analysing data
to really understand supply, demand and structural drivers,
and China’s markets will largely remain very robust for as
long as we can forecast.”