Axa Real Estate Investment Managers (Axa Reim) has signed a memorandum of understanding with China's Ping An Trust to co-invest in China.
The investments will target middle- to upper-class residential development projects.
"Axa Reim is a strong believer in the need to have local expertise to access local real estate markets," said Axa Reim's chief executive officer, Pierre Vaquier, in a written statement. "We are therefore delighted to be able to team up with Ping An Trust who shares the same values, especially in terms of the need and desire for robust risk management and strict corporate governance."
Axa Reim has around €40 billion ($60 billion) of assets under management globally, making it the largest real estate fund manager in Europe and the fourth-largest in the world based on rankings by Inrev, the European Association for investors in non-listed real estate funds.
Axa Reim set up a Japan office in 2006 and followed this up by opening an Asian headquarters in Singapore in September last year. At the time, it was managing $2 billion which its clients had committed to the region, and of that it had invested around 25%. Frank Khoo was poached from Pacific Star Fund Management and named global head of Asia. Khoo is based in Singapore and reports to Vaquier. He is also part of the Axa Reim executive committee.
The partners are targeting the mid-to-high end of the housing market because of better pricing opportunities and because innovative design can be incorporated in the developments, said Khoo in the statement. China's young and growing population, rising incomes, current low mortgage penetration rates and the attractiveness of investing in property, a sector that is self-financing and self-liquidating are key drivers for the business opportunity, he added.
Axa Reim has been preparing to invest in China's residential property market since earlier this year when it felt that the market had started showing signs of recovery. "Axa Reim is confident of a sustainable broader market recovery in the medium to long term after the initial market exuberance displayed begins to taper off," the real estate specialist firm said.