UBS to enter Australian property market through joint venture with local developer
Switzerland-based UBS AG is set to enter the property market in Australia by partnering with closely-held local builder Grocon Pty, a Bloomberg report said. The largest lender in Switzerland is set to invest up to AU$10 billion or $9 billion in the next five years in the joint venture.
UBS Head of Asia-Pacific Real Estate Trevor Cooke, who is based in Sydney, told Bloomberg in a phone interview, "There's significant competition in Australia from pools of capital for access to investment-grade stock. The best way to offer our clients realistic solutions is to partner with an originator. The Asia Pacific as a whole is a strategic priority and Australia is one of the most attractive markets in the region." The report said UBS now only has property shares in the country.
The demand for Australian property among investors is increasing due to relatively higher yields and increasing home prices in the largest cities of the nation, the report said. Citing data from CBRE Group Inc, the report said Australia was considered the third most active market in the Asia-Pacific for commercial property transactions in the three months that ended on September 30. Japan and China were the top two.
Cooke said the joint venture UBS Grocon Real Estate will be choosing investments from Grocon's planned and existing projects as well as from other sources based on investor demand. He added that the venture will also establish separate accounts and "club-style" vehicles with no more than five institutions instead of having traditional funds that are open to many investors.
He anticipates that 2014 will be an exciting year to develop the platform even if the number of funds as well as the timeframe for forming them will be dependent on what investors want. Cooke also added that the joint venture will first focus on prime office properties to cater to conservative investors and residential projects in order to get higher returns.
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