BEIJING, Feb 5 (Reuters) - LaSalle Investment Management said on Thursday it had invested about 20 percent of a $3 billion property fund, mostly in Japan and China, but that it was being very cautious in looking for buying opportunities.
LaSalle, the fund management arm of Jones Lang LaSalle (JLL.N), unveiled the Asia “opportunity” fund in August, which along with borrowing has up to $12 billion available to buy distressed property in the region.
“There will be great opportunities,” David Edwards, LaSalle’s Asia director, told reporters. “But we are not in a great hurry to make investments at this point in time.”
LaSalle, which has about $50 billion under management, has invested in Japan than China, but was looking for opportunities in Australia as well as Singapore and Hong Kong, said Edwards.
China’s economy was still relatively strong compared to the rest of the world, and because Beijing had been trying until late last year to cool its robust growth, it still has many tools to stimulate growth, the executives said.
“It can still create jobs, it can still fill office buildings and it can still generate retail sales in a way the West can not,” said Jacques Gordon, international director for LaSalle.
However, the property price correction in China will come slower than in other markets — thus damping buying opportunities — as Beijing takes steps to soften the impact from the global recession on the local economy, the executives said.
China will spend about half of its 4 trillion yuan ($585 billion) stimulus package on affordable housing through 2010, and has also scrapped stamp duty for home buyers and sellers, lowered downpayment requirements and reduced mortagage interest rates.
Moody’s downgraded on Thursday Greentown China Holdings (3900.HK) corporate family rating to B1 from Ba3, and its senior unsecured bond rating to B2 from B1. It was the second downgrade by Moody’s for the property developer in five months.
The operating environment in China remains very challenging with poor sentiment and downward pressure on property prices, which are hindering Greentown’s ability to generate cash flow, said the ratings agency.
LaSalle is recommending that investors take a defensive stance, constructing a portfolio by taking on core assets or buying property-related debt.
“The message we are sending our clients it to prepare for a very tough year, and there will be more bad news before good,” said Gordon.
$=6.84 yuan Reporting by Kirby Chien; Editing by Kim Coghill