Allianz Real Estate, the property investment arm of the European insurance giant, opened offices in China and Japan this month as part of an Asia Pacific expansion drive which saw the company grow its portfolio in the region by 83 percent in 2019.
The pair of new branches in Shanghai and Tokyo will bring Allianz Real Estate’s bases in the region to three, under the direction of its regional headquarters in Singapore headed by APAC CEO, Rushabh Desai.
After growing its assets in Asia Pacific to €5.5 billion ($6 billion) in 2019 in part through billion dollar acquisitions in Japan and China, Allianz Real Estate made the decision last year – before the outbreak of COVID-19 – to establish local presences in China and Japan to manage its portfolios in the world’s second and third largest economies.
“One of the things that we are really proud of is the way we conduct our business, using local expertise to scale up and provide access into the various markets, and we are keeping that strategy alive,” Desai said, adding that the COVID-19 pandemic has made having people on the ground more important than ever due to restrictions on international travel.
Growing Portfolios in China and Japan
Desai has built out the insurer’s real estate division in the region to 30 team members since opening the insurer’s APAC HQ in Singapore in 2016, with the opening of its two latest locations coming soon after Allianz established what Desai calls meaningful portfolios in China and Japan.
The insurer is building its holdings by focusing on assets in core markets in the region, including teaming up with funds managed by Alpha Investment Partners seven months ago Allianz to purchase an 85 percent stake in a commercial complex in Beijing from Warburg Pincus-backed developer D&J China for €1 billion.
In October 2019 the insurer marked its first direct transaction in the Japanese real estate market with the $1.1 billion purchase of a portfolio of multifamily assets from Blackstone.
Putting People on the Ground in Shanghai
To support its China operations, Desai has put together a team in Shanghai which includes Patrick Kuo, who heads up acquisitions across China after being brought on board last November from Apollo Global Management.
Reporting to Singapore-based APAC head of acquisitions Danny Phua, Kuo is supported on acquisitions in the new Shanghai office by Paddy Gu, who joined the insurer earlier this month after parting ways with frequent Allianz collaborator Keppel Capital, while Ella Hu is responsible for asset management.
The fourth member of the team is senior associate in asset management Fanshu Qin, who was hired in August last year from China Life.
Targeting Multifamily Assets in Japan
To manage the portfolio of multifamily assets acquired from Blackstone, as well as to support future acquisitions in Japan, Allianz’ Tokyo office is led by Masayuki Kato, who joined the firm earlier this month and reports to Asia Pacific head of asset management, Chiang Wei Ng.
A real estate veteran with 16 years’ industry experience, Kato served most recently as a director at Hudson Japan where he had responsibility for the asset management of Lonestar’s real estate fund investments in the country.
With the former Hudson executive currently manning Allianz’ Japanese operations as the sole executive on the ground, the company plans to expand its Tokyo office over the next 12 to 18 months, according to Desai.
Aiming at China and Japan Post-COVID-19
Despite the disruption to the markets triggered by the COVID-19 pandemic, Desai said the insurer’s real estate investment strategy in the region has stayed fundamentally constant, with China remaining key strategically and Japan continuing to be one of the company’s core targets.
“We look at opportunities on a risk-adjusted basis globally and if a good opportunity presents itself, we will pursue it,” Desaid said.
Allianz considerably grew its portfolio last year across what Desai calls its top three core asset classes – residential, office and logistics – and the company will continue to target these sectors for opportunities in 2020.
“If you look at the post-covid scenario, logistics has proved itself to be more resilient, but we will continue to target core residential and office assets in the region,” Desai said.
The insurer stepped up its Asia Pacific logistics exposure last year, injecting $600 million last May into China- and Japan-focused funds managed by warehouse developer and fund manager GLP.