Blackstone and KKR Bid for Korean Pension Debt and More Asia Real Estate Headlines

In today’s roundup of regional news headlines, fund management colossi Blackstone and KKR throw their hats in the ring to manage a Korean pension fund’s overseas real estate debt, and jilted investors vent their rage at a Chinese shadow bank. Also making the list are property agents painting a dire picture of the mainland market, plus a Country Garden bond downgrade.

Blackstone, KKR Join Race for Korean Pension Fund’s Real Estate Debt

South Korea’s Government Employees Pension Service has shortlisted four global investment firms — Blackstone, KKR, Goldman Sachs and Starwood Capital Group — for its overseas real estate debt management, according to banking sources on Friday.

GEPS will see the candidates’ presentations, select two firms and commit up to a combined $70 million, or $35 million to each asset manager. Some 80 percent of the two blind pools should target Europe- or North America-based real estate debt funds, excluding non-performing loans and distressed assets. Read more>>

China Shadow Bank Misses Dozens of Payments, Sparking Protests

One of China’s biggest shadow banks skipped payments on several investment products, sparking rare protests in Beijing as the fallout from a deepening property slump spreads to the financial sector.

Zhongrong International Trust missed payments on dozens of products and has no immediate plan to make clients whole, indicating that troubles at the embattled shadow bank are deeper than previously known. Read more>>

China’s Housing Slump Is Much Worse Than Official Data Shows

Judging by China’s official statistics, the nation’s housing market has been remarkably resilient in the face of tepid economic growth and record defaults by developers.

New home prices have slipped just 2.4 percent from a high in August 2021, government figures show, while those for existing homes have dropped 6 percent. But the picture emerging from property agents and private data providers is far direr. Read more>>

Country Garden Bonds Tick Higher as Buying Continues After Downgrade

The bonds of Chinese developer Country Garden Holdings were downgraded to deteriorating from stable by research firm GimmeCredit on Wednesday in the latest blow to the troubled company.

“Country Garden is in a downward spiral, with its bonds now trading at very low cash prices,” analyst Cedric Rimaud wrote in the downgrade. Read more>>

South Korea Home Prices End 13-Month Slide

South Korea’s house prices rose slightly in July after 13 months of decline, data showed on Wednesday, with the rise led by demand for preferred residential complexes in the capital area. Korea Real Estate Board’s nationwide house transaction price index rose 0.03 percent in July, after a 0.05 percent fall in June, and posted its first monthly rise since May 2022.

By region, home prices in the capital city of Seoul rose 0.15 percent and those in the greater capital area also climbed 0.15 percent, while the decline in other areas softened to 0.09 percent from 0.13 percent the month before. Read more>>

US Office Woes and China’s Slowdown Rattle Singapore’s REIT Market

One of Asia’s largest markets for REITs is reeling from America’s office slump and China’s slowing economy.

Singapore’s $73 billion market for publicly listed property trusts was recently shaken after a US office trust run by Manulife said in July that the value of its portfolio fell 15 percent in the first half of 2023, causing it to breach a loan covenant. The vehicle and two others that focus on US commercial properties have lost more than two-thirds of their combined market value over the past year. Read more>>

Hong Kong Rental Market Boosted by Chinese Taking Up Top Talent Pass Visas

An influx of mainland Chinese taking advantage of a new visa programme to work in Hong Kong is helping buoy rents in the city to the highest level in almost two years, reversing a downward trend that started during the pandemic.

Hong Kong saw its population grow by 2 percent, or 152,000 people, in the past year to June from a year earlier, with the government partly attributing the rise to the different talent attraction programmes. Read more>>

Canada’s CDPQ Posts Average Return of 6% Over Five Years

Canadian pension manager Caisse de Depot et Placement du Quebec generated an average return over six months of 4.2 percent, in line with that of its benchmark portfolio’s 4.1 percent.

Over five years, the average annualised return was 6 percent, above the benchmark portfolio’s 5 percent, which represents over $18 billion in value added for its depositors. Read more>>

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