RRJ Capital has started to market a China-focused Asian real estate fund. The private equity firm is targeting USD 1 billion for its second major fundraising effort. Earlier this year, RRJ Capital was able to secure USD 3.6 billion from investors in just six months.

In an interview with the South China Morning Post, RRJ Capital Chairman and Chief Executive Officer Richard Ong said they were aiming for a USD 500 million China-focused fund. However, he said that if they see the demand, they could increase the fund size to USD 1 billion.

According to the SCMP report, this was a tricky timing for the firm's China property fund as Beijing had continued to bring down home prices. A decade of nearly uninterrupted double-digit gains had led to very expensive housing costs for the mainland's emerging urban middle class which increases the risk of social tension. The report said this was something that the Communist Party did not want to happen.

Although Ong acknowledges the risks, he said the perils were borne by companies that purchased land banks to speculate on the increase of prices. It did not lay with residential developers that constructed properties for sale to the fast-growing middle class. Citing analysts, the SCMP report said there were at least 10 million people who move to Chinese cities from the countryside on a yearly basis. This has pushed the Chinese economy away from manufacturing for exports and brought the focus to consumption and services.

Ong told the SCMP that his company will focus its investments on healthcare, energy, consumer, financial services and real estate because he believes that the Chinese middle class will continue to grow in the next 10 to 20 years.

He added, "We are focused on residential [development]. We don't mind investing as well in shopping malls, but not office space. Shopping malls fit in with the growth of the middle class."