BROADCASTS.com

In this episode of China Money Podcast, guest Sachin Doshi, managing director and head of private real estate investments Asia Pacific at Dutch pension fund asset manager APG, speaks to our host Nina Xiang about investing in China's private real estate sector. Doshi shared stories behind APG's big bet in Chinese logistics real estate company e-Shang Redwood and its investment in Shanghai commercial property firm Chongbang. He said senior housing is a sector that the €430 billion-under-management institution may invest in China in the future. Don't forget to subscribe to China Money Podcast for free in the iTunes store, or subscribe to China Money Network weekly newsletters. You can also subscribe to China Money Podcast’s Youtube channel or Youku channel. Q: How has APG's Asian investments changed over the past three years since I last spoke with your colleagues? A: Our fundamental investment strategy has changed significantly in the past three years. Three years ago, a lot of our investments were focused on investing in funds or programs on a pan-Asian basis. We have moved away from the co-mingled pan-Asian strategies and moved towards country and city specific investment platforms with local partners in each of our key markets. Q: What are some main drivers for this change? A: As long-term investors, we want to build scale in our investments. When you go into a co-mingled multi-sector or multi-country strategy, you don't necessarily get the best local partners in each of the specific countries or sectors you invest in. Our current approach enables us to get access to the best local partners, and makes it easier for us to commit more and repeated capital to build scale. Q: What is the asset allocation of APG's Asian investment portfolio now? A: Real estate is about 9% of our global total asset-under-management (AUM), and about a quarter of that is in Asia Pacific. Our total AUM in Asia Pacific real estate is around €8 billion, about half of that is in private real estate investments. Q: I remember the Asia Pacific real estate AUM was €6 billion three years ago, and the private real estate investments took a smaller share of the total? A: Yes, we've seen a lot of growth, especially on the private real estate side, partially because the net asset value of our exiting investments has grown, and we've struck new partnerships in order to achieve scale. Q: When you look across the Asia Pacific real estate landscape, where do you see the best investment opportunities right now? A: Australia and China are obviously very important to us. We are increasingly allocating capital into India as well, but India is never going to be a big part of our portfolio. We also have exposure to other places like Hong Kong, Singapore and South Korea. Q: In China, APG has made big bets on logistics real estate with investment in e-Shang Redwood, as well as Shanghai commercial real estate firm Chongbang. How did you single out these two segments? A: We wanted to invest in sectors that will benefit from China's economic transition from an investment-led model to one focused on consumers. Retail and e-commerce will continue to grow over a long period of time, and that's why we invested in e-Shanghai Redwood. The investment in Chongbang is a much more targeted strategy. We believe Shanghai will continue to become a major metropolitan urban center in the world, and retail commercial is critical in building a city. Chongbang creates malls, not really as malls, but as indoor and outdoor space that attract people and make them want to spend the whole day there. Q: I've been to their Life Hub Jinqiao in Pudong, Shanghai. Share some details on how the deal came together for APG and Ivanhoe Cambridge to lead a US$920 million investment in Chongbang last June? A: We have been speaking to Chongbang for three years. Initially, we couldn't put together a structure that worked for both partie...