ING plans second $700m China fund

As Western markets continue to see less activity, ING plans to sink a further $700 million into the growing Asian property market.

Dutch property firm ING Real Estate, the world’s biggest property fund manager, is planning a second dedicated property fund for China, to launch next year at a target of $700 million (€477 million).

The money will add to the $1.6 billion ING already has committed to China from two pan-Asian funds closed earlier this year and its Real Estate China Opportunity Fund I launched late last year on $350 million, with a target return of 20 percent. ING Real Estate’s Asia head Robert Lie told Reuters news agency this week that the fund could invest in some commercial property as well as housing.

ING’s first China fund is focusing on mid-range residential developments in primary and secondary cities in China, largely in the form of joint ventures with local operating partners. In March, for instance, ING set up a joint venture with local developer Gemdale Corporation to build a residential property in Foshan, a city on the Pearl River Delta outside of Hong Kong.  The Dutch firm is investing $40 million (€28 million) in that joint venture for a 49 percent stake in the project. It is the second project ING has undertaken with the Chinese developer.  ING first entered China in 1996 and has worked with other local developers like Shanghai Forte Land, for a project in Shangahi, and Raycom International for two housing projects in Changsha, the capital city of Hunan Province.

Chief Executive George Jautze told Reuters news agency this week that it is also planning a new fund for Japan to launch next year, and after spending most of the $350 million raised at the end of 2006 for residential development in China, the firm plans a follow-up fund about twice that size.