 
## REALTY REALITY

### Interviews with Leading Real Estate Investors in Asia

By Ram Garikipati

Copyright 2012 by Ram Garikipati

Smashwords Edition

About the Author

Ram Garikipati is a seasoned business journalist, with close to 17 years of ground experience in India and South Korea. Armed with an M.Phil in Applied Economics, he joined The Hindu Business Line, a leading English–language Indian business daily, in June 1995. He covered finance, infrastructure, IT & Telecom for the newspaper and was also a fortnightly columnist. In April 2004, he relocated to Seoul, South Korea as a business correspondent of The Korea Herald covering the operations of international companies in the country, and a year later, joined The European Union Chamber of Commerce in Korea as the Chief Editor of their monthly business magazines – Infomag and Infomag Real Estate. He also headed the corporate communications department of the Chamber till September 2012.

### Introduction

Ever since the 1997 Asian financial crisis, property markets have greatly developed through the years. Asian governments have improved the financial stance associated with the structure of housing finance, allowing more access to a diverse range of mortgages products.

Housing in Asia has an important role in economic growth. In the early 1990s large urbanization in Hong Kong, Singapore, Thailand, Philippines and other Southeast Asia countries brought about a large housing price appreciation. Asia attracted global economic interest up until the economic crash of 1997. A decade later, the Asian economy has been stabilized, and has allowed the property market to advance. As a result, foreign investment is continuing to grow. The market is currently experiencing a 50% increase in the amount being invested into Asian countries globally. Although some countries in Asia may not be stable enough for international investment, the majority of the markets are expected to boom.

This handbook presents interviews with some of the leading players in the real estate market in Asia, which will help you evaluate the market through their eyes. Most of these interviews were granted to me in my capacity as Chief Editor of Infomag Real Estate, a monthly publication of the European Union Chamber of Commerce in Korea. They were conducted between 2010 and 2012. While some interview conducted two years ago may seem outdated, they are not so, because they provide you a glimpse of the market as it was then, and continues to remain buoyant.

The following are the interviews in order:

  * Mr. Ian Thomas, Chairman of Thomas Consultants,

  * Mr. Brian Newman, Founder & CEO, Green Cities Asia Ltd

  * Mr. David Blackhall, Deputy Managing Director, Real Estate, VinaCapital

  * Mr. Andreas Martin, Head of International Acquisitions & Sales, Deka Immobilien Investment GmbH

  * Mr. Chua Choy-Soon, Managing Director, SEB Investment

  * Mr. Massimo Roj, Founder and Managing Partner, Progetto CMR

  * Mr. Simon Harding-Roots, Chief Operating Officer, Treasury Holdings China

  * Mr. David Martin, Head of Retail, Commercial Property, Hongkong Land Ltd.

  * Ms. Arlida Ariff, President & CEO, Iskandar Investment Berhad

  * Mr. Michael Bowles, National Director of Asia Capital Markets, Jones Lang LaSalle Japan

  * Mr. Erwin Stouthamer, Principal, Composition Capital Partners

  * Mr. Jeremy Stewardson, Executive Director, ANREV

  * Mr. Mark Inch, Chairman, Société de la Tour Eiffel

  * Mr. Nicholas Wong, Principal, The Townsend Group

  * Mr. Edward Casal, Chief Investment Officer, Global Real Estate Multi-Manager Group, Aviva Investors

  * Mr. Lee Jung-whoon, General Manager, Finance & Investment Dept., Korea Asset Management Corporation

  * Mr. Joyce Lo, Associate Director – Head of Corporate & Investor Strategy, Sniper Capital

  * Mr. Rong Ren, Managing Director & CEO, Harvest Capital

  * Mr. Robert Gilchrist, Founder & CEO, Rockspring Property Investment Managers LLP

  * Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate & Mr. Frank Khoo, Global Head of Asia

  * Mr. Tang Jun, Chairman, YangGuang Co. Ltd.

  * Ms. Sandra A. Urie, Chairman & CEO, Cambridge Associates

  * Mr. Robert McKellar, CEO- Asia Pacific, Savills Asia Pacific Ltd.

  * Mr. Jack Foster, Head of Global Real Assets, Franklin Templeton Real Asset Advisors

  * Mr. Christopher Merrill, Co-founder, President & CEO, Harrison Street Real Estate Capital

  * Ms. Anna Ranova Kerr, Tengbom Architects

  * Ms. Regina Lee, General Manager, Shinhan BNP Paribas Asset Management

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Mr. Ian Thomas, Chairman of Thomas Consultants

Thomas Consultants Inc. is a consulting firm that specializes in providing optimal retail development strategies for: Retail Projects and Shopping Centers; Downtown Retail Precincts; Resort Retailing and Master Planning; Airports and Cruise Ship Facilities, as well as Transit Nodes and other large-scale Mixed-Use Development.

Thomas Consultants' head office is based in Vancouver, Canada, with additional offices in both Korea and Australia. The firm is recognized as a leader in the strategic planning of retail facilities in a wide range of project types, including shopping centers, street retail districts, resort villages, master-planned communities, urban entertainment centers, airport and cruise ship terminals, and transit-oriented development projects.

The firm is currently engaged in major retail planning assignments in over 50 countries around the world. Through its international project exposure and Chairman Ian Thomas' leading role in the International Council of Shopping Centers' Annual International Design & Development Awards, the company has the ability to share global innovations and leading edge concepts with its clients. This allows its clients, who include the world's leading shopping center developers, owners, operators and designers, to adopt the most current ideas and strategies and ensure success in their retail projects.

The company is also affiliated with Brisbane-based Foresight Partners, who specialize in economic and development advisory services in the Australia and New Zealand region. Its firms collaborate to provide clients specialized expertise and strategic input on a variety of real estate development issues.

Thomas Consultants has been instrumental in adding value to numerous key retail, entertainment, resort and mixed-use projects around the world. Its input as Development Strategists is particularly relevant during the planning process, where the company ensures that such a development, with its key retail, entertainment and food/beverage elements, is not only truly matched to the market and so works optimally in practice, but also includes the points of difference that are critical for success in today's competitive environment.

Identifying the most appropriate market niches, opportunities and sizing for these strategic elements is imperative. In addition, we take this strategic vision right down to a detailed tenant mix plan, as well as identifying the most appropriate retailers and operators for each of the project's major components or zones. This creates a blueprint for guiding the leasing team in securing official interest from target retail, entertainment, and food & beverage tenants. Thomas Consultants are not agents, but work on a very complementary basis with most major leasing firms. Our exposure to leading edge developers (many are our clients) is instrumental in identifying new retail concepts and formats.

Mr. Ian Thomas, Chairman of Thomas Consultants, sits on the Board of Trustees of the International Council of Shopping Centers (ICSC) and its Educational Foundation in New York. Through this vehicle the company has exposure and contact to a myriad of international retail operators, developers and investors. He also is the Chairman of ICSC's International Design & Development Awards which evaluates and judges the world's best new shopping centers. With this background and international network, the firm experiences leading edge ideas first hand.

In an exclusive interview, Ian Thomas noted that Korea is now a major focus for the firm. Thomas Consultants Korea is a major office where it employs a staff of approximately 20 professionals. Its client base is wide and varied and includes such major institutions as: Daewoo Motor Sales Co.; Doosan Construction; Dosi and Saram; GS Retail; Hyundai Corporation; Lotte Group; Samsung Group; Shinsegae Group; SK Group; and Taubman Asia.

At Thomas Consultants, we pride ourselves on creating unique strategies that assist our clients in realizing the greatest value from their development opportunity. By incorporating the latest principles in place making and master planning, we help the world's leading developers, architects and urban planners craft innovative strategies that allow them to create unique points of difference necessary to thrive in today's competitive environment," he said.

He said the company realizes that the retail industry is in a constant state of transformation. New retail concepts are continually being introduced at a dizzying pace. Through its international exposure, the company is able to share the latest ideas and trends that are being introduced worldwide.

Undoubtedly one of the major changes in the retail industry is the diffusion of lifestyle concepts through the market. Open air lifestyle centers are rapidly being adopted on a global scale and their introduction has brought a major shift in consumer expectations. Thomas Consultants has been at the forefront of this change and today the vast majority of our work involves planning strategies for multi-purpose and mixed-use destinations.

We are actively engaged in assignments that propose new open air lifestyle centers, urban entertainment centers, downtown revitalization projects, mixed use town centers and transit oriented developments. The exposure to such a wide variety of project types, in both mature and emerging markets, enables us to leverage our expertise in creating living, breathing retail environments that are at the heart of livable and sustainable communities."

Since the company's inception over 30 years ago, it has continually been at the forefront of creating retail development strategies for recreational destinations. The resort retail industry has experienced a boom in recent years as developers are looking beyond residential property and recreational infrastructure development to diversify their revenue streams.

Thomas Consultants continues to push the boundaries on the resort front by helping our clients find innovative strategies that create truly special places. With a long list of leading beach, golf, and ski resort clients around the world, we have the experience and expertise to make your resort retail development stand the test of time," he said.

In addition to its core consulting services, Thomas Consultants also has the ability to produce in-house marketing documents. These promotional documents empower our clients to maximize their new development's exposure by communicating the key project highlights through a visually effective medium. Customized content including charts, tables and graphics can also be created and tailored to lend an extra degree of professionalism to the document.

Our tailored promotional documents are designed to efficiently communicate the development opportunity and have helped many of our clients attract prospective retailers and/or joint development partners."

Through decades of research, the company has assembled an extensive library of research materials including project profiles on many of the leading retail centers around the world, he noted.

Speaking on the impact of the global economic crisis, he noted that the whole world has been affected by the financial meltdown. However, countries like the representing BRIC and Korea are quickly emerging from this crisis – in fact, several have come through almost unscathed. An excellent barometer is retail sales volume and with department store sales growing by almost 8% in the last quarter, it demonstrates the optimism and robust nature of the Korean consumer.

The shopping center industry has been around for 60 years. Tried and proven principles have emerged on how to develop a truly successful center. The world is rapidly globalizing, particularly accentuated by the expansion of major international retailers into new countries and sub-markets. As such, a global development platform is emerging. If Korea hopes to attract significant foreign direct investment, it must follow the global principles of development," he said.

On the opportunities for Korea, he noted that the country is strategically located to participate in the overall boom occurring in the Asian region. With the exception of Japan, most Asian countries are enjoying strong growth, particularly China. Some of these economies have been somewhat self-contained, eg. India, but with greater prosperity occurring there is greater resulting fluidity as well. Korea has a real opportunity to participate in this upswing dynamic," he said.

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Mr. Brian Newman, Founder & CEO, Green Cities Asia Ltd

Established in London, Green Cities Asia Ltd has chosen Seoul, Korea as the corporate base for its Asian property development expansion. The company's founders – Mr. Brian Newman and Mr. Jason Ahn – are merging their international property development, investment financing and real estate marketing experience with some of the world's leading thinkers and practitioners in the field of sustainable urban development to give Green Cities Asia Ltd unparalleled capacity to deliver world-class projects for governments, investors and stakeholders.

As noted by Mr. Newman who is also the CEO, Green Cities Asia Ltd is a response to a growing need in Asia for real estate companies who understand the unique complexities of large-scale urban development.

We are a leader a leader in sustainable urban development thinking and practice. Our projects will set new standards for large-scale property development in Asia. GCA is positioned at the cutting-edge of green city development – innovative, intelligent, market responsive and sustainable," he said.

Mr. Newman has gained over 20 years senior executive experience in the field of large scale urban development having worked for industry leading organizations in Australia, North-East Asia, South-East Asia and the Middle East. His academic qualifications include a degree in Civil Engineering and a Masters Degree in Business Administration.

He brings a unique blend of private and public sector experience and knowhow to his work. As CEO of the Sydney Olympic Park Authority he led the post-Olympic transformation of Sydney's Olympic precinct to create a new urban township that embraced the same commitment to sustainability that gave Sydney its international 'Green Games' reputation.

In an exclusive interview, he noted that whilst the implementation of a more environmentally friendly, carbon neutral approach to urban development is an effective response to the issue of climate change, there is a need for city development to address a broader range of environmental issues. Broader still is the important concept of sustainability.

Green Cities Asia Ltd is committed to a four pillar approach to practicing strategic sustainable urban development. As developers, our challenge is to help make cities more economically efficient, more comfortable, more socially equitable, culturally rich and environmentally sustainable, he said.

Mr. Newman noted that today we exist in a world where 50% of the earth's population lives in urban areas. By 2050, this figure is forecast to reach 70%, as the world's population grows from 6.8 billion to 9.1 billion. Cities are known to consume 75% of the world's energy. By the year 2030 over 5 billion people are likely to live in cities, contributing over 80% of greenhouse gas emissions. Ecological foot-printing shows that the planet is consuming 25% more renewable resources every year than it can replenish.

Cities are the engines of global economic growth. The quality of the living/working environment within cities is a major factor in determining the flow of investment capital and of human resources around the world.

It is therefore imperative for economic and environmental reasons that city leaders promote green cities, towns and urban villages that are planned, designed, built and managed with a view to minimizing their environmental footprint and provide a strong sense of well-being for their communities, he said.

GCA recognizes the responsibility it has to contribute to society by developing environmentally sustainable communities that enunciate a new consciousness to the development of our urban environment, creating exciting new places and spaces in the process. The company has the knowhow and experience to meet the challenge of developing city interventions that improve a city's quality of life.

One of our key business objectives is to work with governments (national, regional and city governments) and our private sector partners to develop new urban communities that demonstrate what 'sustainable living' is about and how an improved quality of life can be offered to communities of all social levels. This is achieved within a framework of qualitative and quantitative performance measures," he said.

These communities have been referred to as green cities, eco-towns, green villages etc. They are exemplified in existing urban development projects such as Hammarby Sjostad in Stockholm; the Augustenberg and Western Harbour precincts of Malmo, Sweden; Dockside Green in Victoria, British Columbia; Curitiba in Brazil; and in the concepts behind new international urban development projects such as Masdar in Abu Dhabi, Elephant Castle in London and Magok-Dong in Seoul.

In the end, sustainability is about Quality of Life - this notion goes to the core of our company's philosophy. We believe development is not just about building buildings, it is about creating places for people."

GCA's urban communities are characterized by a strong sense of place that are sustainable economically, socially, environmentally and culturally and offer a high Quality of Life for their communities.

Speaking on the competitive advantages of the company, he noted that first and foremost is the knowledge/expertise in the field of sustainable urban development including master planning, eco-design, green building practice, social strategies. The company also has the ability to define unique project concepts that create new product categories in the marketplace.

Our ability to source foreign direct investment (FDI) and international joint venture participation and our commitment to creating great places through every step in the property development process also place us ahead of our competitors," he said.

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Mr. David Blackhall, Deputy Managing Director, Real Estate, VinaCapital

With a bevy of development projects in the works, and a strong year-end performance projected, Vietnam is carving out a spot in the emerging property market. A revitalized stock market; rebounding global economy; and strides in the nation's infrastructure are contributing to the favorable investment outlook.

To learn more about the real estate market in Vietnam and the opportunities available for foreign investors, I caught up with Mr. David Blackhall, deputy Managing Director, Real Estate, VinaCapital.

VinaCapital is one of the largest property investors and developers in Vietnam. VinaCapital Real Estate (VCRE) is the real estate advisory and development service for VinaCapital Group, which manages three closed-end funds that trade on the AIM Market of the London Stock Exchange. These funds are among the largest vehicles for investment in Vietnam, and include VinaLand Limited (VNL), with net assets of USD694 million. VNL invests in residential, retail, office, mixed use and hospitality assets across Vietnam. VinaCapital will launch a new non-listed Vietnam Real Estate LP/GP structured Fund in Q2 2010 that will `capitalize on this exciting market.

The company is responsible for managing and developing over 40 of Vietnam's top real estate assets. In addition to a team of over 70 of Vietnam's most qualified real estate professionals, VCRE also works closely with VinaProjects, a newly established construction and project management joint venture between VinaCapital and inProjects from Hong Kong. Together, VCRE and VinaProjects will work to deliver truly international standard real estate projects. Work is currently underway on several major residential and retail projects in Danang, and the Dai Phuoc Lotus township project in Dong Nai, near Ho Chi Minh City.

Excerpts:

Vietnam's urban landscape is being transformed as the country undergoes unprecedented development that has seen an average annual growth rate of over 7 percent for the past decade. An important part of Vietnam's development is the complete transformation of its urban and industrial landscape. As incomes rise, Vietnam's growing middle class is demanding new, well-planned residential areas, and modern retail space and leisure facilities.

In the current market, the residential sector is gaining the most headlines, as middle-class consumers are showing high demand for new housing, and a second-home market has emerged for higher-end residential resort properties. The mortgage market is developing quickly, which will facilitate investment in projects focused on first home, low- and mid-range consumers (previously an area with very low margins). Demand for low- and medium-end projects in 2010 is expected to increase fourfold against 2008.

In Vietnam's largest city, Ho Chi Minh City, CB Richard Ellis' fourth quarter 2009 research update states that 60,000 housing units are expected to be completed by 2012, which remains far below expected demand of more than 110,000 units. By 2020, CB Richard Ellis estimates almost half a million new homes will be needed. In this environment, where demand is far outreaching supply, developers looking to bring affordable, good-quality modern housing to the market are increasing as there is great reward potential at hand.

The retail market also is an area seeing significant activity, as there is a very low supply base of modern shopping space in major cities — less than 800,000 square meters in Hanoi and Ho Chi Minh City. Vietnam rated sixth on A.T. Kearney's 2009 list of the world's top emerging market retail markets. There are many new developments on the drawing board, but large foreign hypermarket and supermarket chains are still actively pursuing opportunities. Sites with the right blend of size, location and cost are very hard to secure, and this has kept the pace of foreign investment in this sector relatively slow to date.

The hospitality sector was inevitably hit by the global economic slowdown. Hotel occupancy and average daily rates dropped significantly in 2009 as tourist travel to Vietnam was down 20 percent for the year. The market is not expected to fully recover in 2010; however, the long-term potential remains strong with tourist visits expected to top 5 million by 2013. Domestic travel also is increasing rapidly as more budget airlines enter the market. Currently, three- to four star business hotels in city centers are attracting the most attention from international investors.

The sector hardest hit by recent macroeconomic trends is the office market, where a significant increase in supply coincided with the global economic crisis. Vacancy across all office grades was 14.5 percent in Ho Chi Minh City at the end of 2009. Class A office buildings in Ho Chi Minh City have seen rents fall from more than US$60 per square meter in early 2008 to around US$35 per square meter currently. With a further 350,000 square meters of supply expected during 2010, rents are expected to soften an additional 10 percent to 15 percent.

For investors new to Vietnam, recognizing some of the basics is important. There are no REITs in Vietnam, and listed real estate equities are either small-cap or, if larger, are often part of diversified conglomerates that may not interest overseas institutional real estate investors. There are, however, numerous other routes to invest in Vietnam's real estate sector. Overseas investors are usually best served by partnering with an experienced real estate developer that has in-depth exposure to Vietnam. A team with a strong network, local expertise and a deep understanding of the legal terrain is the key to overcoming Vietnam's complex regulatory environment.

Land leases from the state or other organizations holding a land-use right can be issued to foreign investors for a maximum of 50 to 70 years (Decree 84/ND-CP) for real estate projects. Generally, a land lease is obtained through a native Vietnamese partner that contributes its right to use the land as part of its capital contribution to the joint venture. However, it also is the case that 100 percent foreign-owned entities can obtain investment licenses and land use rights for real estate development. More recently, effective from 1 January, foreigners can own a majority stake in a Vietnamese real estate joint stock company.

Despite the merits of Vietnam's developing real estate market, there are many issues to consider. Investors should look carefully at the sector exposures and overall context of any investment platform. Investors also must pay great attention to the ability of the investment team to promptly and effectively manage the many issues specific to investing in real estate in Vietnam.

For instance, Vietnam's legal system and regulatory framework are fast developing, but weak by international standards. There is a resulting lack of transparency in many areas, such as land resettlement, which can take two to three years depending on the scale and location of the development. Urban infrastructure in Vietnam is poor, and the pace of development is slow, so real estate developers should carefully consider the impact of transport and other types of infrastructure on their projects.

Vietnam's government during the past two years has demonstrated an admirable ability to manage the economy and maintain a path of stable economic growth. The extreme speculation of 2006 and 2007 has been removed from the real estate market and is not likely to return in the foreseeable future. Going forward, investors and developers who are able to recognize issues early on and successfully negotiate Vietnam's challenges will be rewarded by a market eager for a complete transformation of its built environment.

Vietnam has strong property rental and income rates compared to many neighboring countries. While investors arriving in Asia predominantly look first to China for opportunities, Vietnam offers compelling overall fundamentals with less risk of a bubble emerging as substantial growth and development of the urban environment continues. Vietnam offers a broad resource base, favorable demographics, low labor costs and a central location in Asia. Two-thirds of the population is below the age of 35, with a population growth rate of 3.4 percent per year. Vietnam has 26 million urban dwellers in 2010 (30 percent of the total population of 86 million by 2020, the country will need to provide housing, retail, entertainment amenities and office and for up to 45 million urban dwellers (45 percent of the estimated total population of 100 million).

Vietnam's cities are low-rise and overcrowded, with outdated electricity, water and drainage services the norm. In short, a complete transformation of Vietnam's urban environment remains in its early stages. Market yields for property owners are high compared to regional countries. The challenge for foreign investors is to navigate a complex terrain of business networks and legal frameworks that remain opaque.

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Mr. Andreas Martin, Head of International Acquisitions & Sales,

Deka Immobilien Investment GmbH

The DekaBank Group, owned by savings banks and Landesbanken (Federal State banks), is the largest provider of open-ended real estate funds in Germany. The Groups two investment companies, Deka Immobilien Investment GmbH and WestInvest Gesellschaft fuer Investmentfonds mbH, have a total of more than 21 billion euro in assets under management. Deka Immobilien GmbH is affiliated with these companies and is responsible for global real estate purchases and sales, real estate asset management, and all other real estate services, including product development.

Bundling the Groups real estate services in Deka Immobilien and streamlining and simplifying organizational processes has generated large synergy effects that provide a win-win situation for all parties involved.

As noted by Andreas Martin, Head of International Acquisitions & Sales, while the two capital investment companies concentrate entirely on their core tasks of fund management, risk management and fund controlling, Deka Immobilien powerfully combines the functions of property acquisition and sale, real estate and resource management, and development of additional innovative products.

"Because we leverage this concentrated clout in the world's real estate markets, backed by our own meticulous market research, we are a sought-after business partner. This in turn helps us continually improve the performance of our products and strengthen our leadership in the market for German real estate mutual funds," he said.

This means that market participants have access to an even broader range of properties, offering attractive rental space in the office, shopping, logistics, distribution and hotel sectors.

The company's activities in the most liquid international real estate markets are represented by more than 410 offices, retail properties, hotels, shopping centers and logistics centers in 23 countries on four continents.

'We represent an international network of specialists providing the highest level of expertise and professionalism. For over 40 years, Deka Immobilien has been the acknowledged market leader with innovative products based on high standards of quality and transparency. Not only do we lead in the field of mutual funds and have set the standards for individual property funds and special funds for institutional investors, but also, our offerings have been confirmed by premium ratings — for the quality of both our products and our management."

Properties are purchased on the basis of stringent return and quality criteria. The knowledge of local markets and leading market research ensures the quality of decisions during a timely, clearly structured and rapid investment process, he said.

Through the two capital investment companies, Deka Immobilien also offers a wide range of

open-ended mutual funds for private investors and special and individual funds for institutional investors. These two companies completely run all the property funds, managing their portfolios and performance.

"Besides these established investment products, we offer a variety of 'fund of property funds' models that are developed in collaboration with the FoF specialists of DekaBank/ Deka Investment GmbH. These products range from approaches based predominantly on German open-ended property funds all the way to international value-added and opportunity funds of funds, offering a wide spectrum of opportunity/risk profiles."

Speaking on the company's investment strategy, he noted that all purchases and sales are systematically aimed at acquiring high-return properties for the Groups two investment companies and selling properties that no longer conform to its portfolio strategy.

He noted that along with very quickly and professionally handling large-volume acquisitions and sales in all of the world's major real estate markets, the company also provides professionally organized financing services to other investors.

The advantages this generates for purchasing assets benefit millions of private clients, as well as institutional investors, insurers, pension funds, and savings and loan banks.

"We make all of our investments on the basis of thorough macro and micro research. For many years we have had our own in-house economics team for this, which has earned

various kudos from the market, as well as an international network of leading real estate consultants."

Speaking on the worldwide acquisitions of the company, he noted that the center of activity is mainly properties in commercial agglomerations, preferably with long-term lease contracts. Those are predominantly: Office buildings/Commercial buildings; Shopping Centers; Industrial Parks; Hotels; Logistics Centers; Real Estate of Mixed Usage and Premises with Potential for Development. The company also develops Projects for the public sector and let them long-term to authorities generally to relieve public budgets.

The properties are purchased on the basis of demanding return and quality criteria. The familiarity with local markets and market-leading research ensure high-quality decisions as part of a systematic, clearly structured and speedy investment process. The process of buying and selling properties plays a very important role in active portfolio management of the kind practiced by Deka Immobilien. In order to hold onto existing clients and win new ones, property investments have to yield convincing returns, he noted.

"We achieve this not only through innovativeness and clout for making acquisitions and sales, but also by excellently managing the properties belonging to our funds. Our real estate management service package also includes first-rate building management and maintenance.

The focus is on ensuring long-term success for both investors and tenants, who profit from our size, market prominence and global positioning."

In this context he noted that the company recently sold the fully let office property Eugene Investment & Securities Building in Seoul, for around 123 million euro. The closing of the transaction took place on May 31st.

Michael Endres, Senior Investment Manager, International Acquisition & Sales, noted that the building has been acquired by the Korean Public Officials Benefit Association, a semi-governmental fund company which manages the pension funds of civil servants.

Located in the city's Yeoido business district, the property has been held in the portfolio of the Deka-ImmobilienGlobal open-ended mutual property fund since September 2004. With an investment volume of almost 70 million euro in 2004, the price now achieved on the sale was around 30% higher than the current appraised value of approximately 95 million euro.

He explained that after uncertainty in the capital markets last year facilitated the exploitation of investment opportunities, the recovery already evident in some markets can now be used to realize sales at a profit. The total floor space of the property of around 40,000 sqm is let almost entirely to Eugene Investment & Securities on the basis of a long-term agreement.

"The sale of the property forms part of active portfolio management. In addition to the successful disposal of properties at a convenient moment, this includes acquiring properties of first-class quality in prime locations and value-enhancing property management," he said.

Martin said that Korea continues to be an attractive market for the company, and investments will continue, even as some of the assets are flipped when the timing is right.

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Mr. Chua Choy-Soon, Managing Director, SEB Investment

The Swedish SEB Group offers a comprehensive range of global and local investment products and has more than 130 billion euro in assets under management worldwide. It's real estate arm, part of SEB Asset Management, is based in Frankfurt, and offers real estate and securities investments, specializing in total return strategies. The company's experience and expertise make it the SEB Group's global center of competence for real estate.

The company's real estate success story began in 1989 with the launch of SEB ImmoInvest. Its largest real estate mutual fund with a gross fund volume of approximately 8 billion euro grew as the Investmentgesetz (German Investment Act) developed, from a fund that invests in Germany and Europe to one that invests around the world.

As noted by Mr. Chua Choy-Soon, Managing Director, SEB Investment GmbH, as of today, the company manages 14 billion euros of real estate globally on behalf of both retail and institutional investors. This amount is split up among various funds, most are core funds which are income driven and some of total return funds which are less income driven.

The majority of the funds, about 70 percent are in office sector, with the remaining in retail, industrial space and residential. For that matter, it is only in Asia (total investment of 1.5 billion euro) that SEB has invested in the residential sector.

"We are the quality leader in the real estate fund market and are expanding our activities for our clients in three areas: SEB real estate and SEB securities investments under one roof; Growth and expansion of the real estate mutual fund business; and, Development of attractive products for institutional investors, he said.

The company believes that real estate, fixed income and multi- asset approaches are particularly well suited to total return strategies. Products based on these strategies are especially attractive to investors seeking a high probability that their income expectations will be met.

"To us, total return means generating a continuous positive target return independently of the market, and hence of a benchmark. This allows us to meet our clients need for types of investment that have visible income flows and that ideally deliver returns above the risk-free money market rate.

Total return means limiting risk, rather than eliminating it. The key parameters here are value at risk and maximum drawdown.

"This is a concern we hear repeatedly by both our institutional and our retail clients. That壮 why SEB Asset Managements performance profile systematically focuses on a total return philosophy. Our concepts are based on real estate, fixed income and multi-asset strategies, he said.

The combination of timely allocation changes to regional exposures and stringent underwriting standards has led to extremely stable performance over decades. For this reason, the recent financial turmoil did not affect the company's investments negatively.

Mr. Chua noted that the key factor determining the stability of a real estate funds performance is the investment strategy chosen by the funds management.

SEB Asset Management recently won an IPD European Property Investment Award 2010 in the specialist category for Germany for its SEB ImmoPortfolio Target Return Fund. The open-ended real estate fund already won IPD awards in 2008 and 2009 for the highest average total return relative to the appropriate sector benchmark over three years in Germany.

IPD defines a specialist fund as a portfolio of interests in real estate concentrated to at least 70% of its capital employed in a single main sector. Nine countries took part in this year's competition: Germany, France, Ireland, Italy, the Netherlands, Norway, Portugal, Switzerland and the United Kingdom.

"Over two decades, SEB Asset Management has shown how to turn real estate funds into solid total return investments. Our investment strategies focus on achieving a stable cash flow on the basis of a balanced risk/return ratio. We continually optimize the risk/return profile through strategically structured portfolio diversification particularly with regard to markets, the mix of locations and tenants, and property sizes, he said.

Be it a blockbuster or a smaller niche product, SEB Asset Management guarantees creative intelligence and technical brilliance throughout. SEB's investment process is based on a combined top-down / bottom-up approach. Firstly, the property markets are compared using a top-down approach based on a market scoring model. However, the success of a real estate investment depends not only on the correct selection of the target markets, but also on the selection of individual properties.

This is why the results of the market scoring model are also included in the property scoring system, which compares individual properties. Property scoring is used on both existing properties and prospective acquisitions. Finally, the effects of investments on the portfolio must also be taken into account. Clear portfolio-specific investment rules ensure that the target risk / return position for the overall portfolio is kept in mind during individual transactions.

The market scoring model filters and assesses the investment universe to identify the markets in which an investment could be attractive in the near future (working universe). The filter

criteria serve to restrict the scope of the investment universe and are applied both at the country level and during analysis of the types of use. Both socio-economic factors and factors specific to individual real estate markets are used when assessing real estate markets and these, too, are analyzed at both country and sub-market level. The threshold values for the filter criteria and the weightings of the assessment factors differ depending on the target risk / return profile. In the case of core products, the focus is on generating cash flows that are as stable as possible rather than on potential appreciation of the net present value.

As a result, longer-term factors are given a higher weighting than is the case for more risk-oriented investment approaches. The description below focuses on the core approach.

After the ranking has been performed, the working universe is divided into a target list and a monitoring list. The target list consists of the target markets for investments, while the monitoring list comprises markets that are under observation but where no investments are actively planned in the short term. In principle, real estate markets qualify as target markets if they fall within the top third of the overall ranking. In a second step, they are compared with the existing portfolio and the feasibility of new investments in terms of resources is established.

The company's three new real estate special funds thrive on our many years of SEB real estate experience on three continents: SEB Americas REI, SEB Asia REI and SEB Europe REI offer access to the world壮 key real estate markets, as total return funds in the conservative risk segment.

The company founded SEB Asian Property SICAV-FIS as a Luxembourg-registered special fund in 2007. This fund is the first vehicle in our product range that invests exclusively in Asia. Over the past three years, it has invested more than 1.5 billion euro in China, Japan, Malaysia and Singapore for all the funds.

Although the company has no investments in Korea, he noted that the company hopes to gain more momentum once the market opens further. Until recently, Korea has been tough for foreigners, but hopefully more opportunities will come in this cycle, he said.

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Mr. Massimo Roj, Founder and Managing Partner, Progetto CMR

Founded in 1994, Progetto CMR has developed a significant experience in the planning and realization of Corporate Interiors. While concentrating on this core activity, its range of consultancy has gradually expanded. Integrated design has always been the strong point of its approach.

Clients are offered a qualified team of 80 professionals with different core competencies, organized into six divisions: Architecture (Building Design and Corporate Interiors), Engineering, Health and Safety, Industrial Design, Process Management, Research and Development.

As noted by Mr. Massimo Roj, founder and Managing Partner, Progetto CMR, the company represents the ability to think and design in an innovative way for the various scenarios and elements of the workplace, with customer satisfaction playing a primary role. For this reason, the company was ranked among the 100 Worldwide Best Architecture Firm in 2010.

"It works in partnership, guaranteeing constant high quality in the consultancy, integrating technological development and research in order to create a satisfactory and stimulating future, he noted.

Mr. Roj studied at the Polytechnic University of Milan where he graduated in Architecture and has been registered Architect in Milan since 1986. From 1982 till 1984 he worked with Spinelli Architects in Milan contributing to the development of the MO-CO Building System for hospitals in Daytona (Ohio - USA), and Kuritiba (Brazil).

In 1984 he joined R. Morisi Architects working on the project for the San Benedetto del Tronto Stadium and for a Business Centre in Kuala Lumpur, Malaysia. From 1986 he worked with Architect Franca Helg in Milan for interior architecture and planning projects; at the same time, for 3 years, he held courses on "Architectural design" as university assistant at the Polytechnic University of Milan.

He noted that as freelance architect, he developed projects for private and public clients, both residential and commercial buildings, among which the restructuring of the baseball Stadium in Milan.

In 1988 he joined an international company specialized in space planning, where he was Project Manager and Project Architect in charge for projects for COMIT, Sun Microsystems, Eli Lilly, Bosch, Dideco, London & Edinburgh Trust Plc, and for the development of the most advanced Software Research Centre for Olivetti O.I.S.R. in Bari. He planned the reallocation project of an area from industrial to office buildings, as new headquarter for some companies of the Assicurazioni Generali Group, in Mogliano Veneto (TV).

"In 1994, I founded my own firm Progetto CMR in Milan where I am in charge as managing partner, opening offices in Rome, Athens and Tianjin, today the leading companies in office space environment,he said.

Mr. Roj developed architecture, space planning and interior design activities, dealing with projects such as: Coca-Cola, Honeywell, Eli Lilly, Ciba Vision, BIC, Montedison, Medtronic, Johnson Controls, BMG Ricordi, Digital, Pioneer, Iri Infoscan, Bayer, Gillette, Heineken Italia, Munchener Ruck.

He is Client leader also for Italian Government: Italian Chamber of Deputy, Presidenza del Consiglio dei Ministri and Lombardia Region, for whom he is responsible for the project of rationalization and reallocation of spaces and for the new image definition. He also developed industrial design projects especially thought for the office such as lighting systems and desks for the companies Artemide, Technolyte, Targetti, Martini, Luxo, Estel, Elitable, Las.

He has been speaker at different symposiums and teacher for several courses as a specialist in office habitat and office planning. Since 1996 he has been holding courses on Space Planning Architecture and Building Management at the Architecture Polytechnic University of Milan. Recently he has also started giving lectures at the University of Tianjin.

He also observed that the company is the Italian partner of the HOK European Architects Network. This partnership offers the knowledge of local and the appeal of working with well-established European practices supported by the delivery capacity of HOK's worldwide organization.

"Progetto CMR is formed from six operating areas: Architecture, Engineering, Health and Safety, Industrial Design, Process Management and Research and development. Thanks to our unusual multi-disciplinary approach, offers optimal space planning for the workplace providing full satisfaction of the user's requirements in terms of management, services and plant, and computer networks; and above all, a particularly well-management cost-containment policy,he said.

Speaking on the activities in Asia, he noted that at present the company is focusing on China, for both the public and private sector projects. With the cooperation of Italian and Chinese architects in China, the company has involved in various projects including a seven-star hotel in Jilin Province, a residential master plan in Tianjin, Cobra's new production plant in Beijing and a 30,000-seat stadium for the Songjiang group.

The company also won the competition for the 'Caohejing Hi Tech Park' in Shanghai, with an area of 170,000 square meters it is located west of the city. The project involves the construction of a commercial district which will house offices, a residential complex, hotel, a research center and related services.

Special attention to the environment has been taken into consideration in the design incorporating plants in order to reduce and save energy. the large amount of green space is the heart of the project. To lower the density of visible construction and significantly increase the area devoted to green, the project foresees the creation of 'hills' below buildings which require less direct light, such as businesses, shopping centers, boutiques, sporting centers, restaurants, bars and a lobby.

Mr. Roj noted that the company will hopefully win many more projects and make its presence felt in a difficult market which had immense potential. Today around 25 percent of the total income accrues from the Chinese market.

"The reason behind our success is the constant dedication both to our customers and to final users. My goal is to make customers' ideas and dreams a reality. However this is not sufficient in itself, as the spaces we plan are meant to be occupied by people. Whenever we imagine and design working and living spaces we always keep in mind who and how will inhabit them. These are economic concepts, not philosophic ones" he said.

He noted that offices and residential buildings are not exercises in style. For this reason he plans from the inside to the outside; that is to say, the building envelope is the result of an analysis of the needs and aspirations of the people living within it.

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Mr. Simon Harding-Roots, Chief Operating Officer, Treasury Holdings China

From its origins in Ireland, the Treasury Holdings Group now operates globally, across two continents and in seven countries. The Group continues to lead the way in identifying and capitalizing on ever-changing global property trends. Established in Dublin in 1989 by John Ronan and Richard Barrett, Treasury Holdings has been a pioneer in the property sector, and has consistently been ahead in identifying and capitalizing on property trends.

Treasury Holdings now controls over 131 individual real estate projects with a combined value in excess of $4.6 billion. The gross development value of the Treasury Holdings Group's projects is over $19 billion.

After its success in Ireland during the 80s and 90s, in the early part of the decade Treasury Holdings began to focus its attention on global property development and investment markets with particular emphasis on China.

As noted by Mr. Simon Harding-Roots, Chief Operating Officer, Treasury Holdings China, today, the company is one of the largest Western developers and investors in China.

"Through our considerable experience in urban development, we endeavor to bring uniqueness to every project under consideration. In addition, Treasury's considerable asset management experience has enabled it to improve existing property assets through active administration of the investment property portfolio.

He joined THCL with over 20 years of international property development experience. A qualified Chartered Surveyor (RICS) he specializes in delivering major mixed use projects. Following 8 years in Dubai where he was responsible for some of the region's most successful retail led mixed use schemes for a leading development organization, Simon spent two and a half years with an international investment and private equity firm in Bahrain establishing their development portfolio. This included the award winning 'Bahrain Bay' waterfront scheme, valued at $2 billion.

He noted that the company intends ultimately to locate one-third of its worldwide activities in the Chinese market. Treasury plans to become fully integrated into Chinese business and culture and to be the most successful Western property company operating in China.

Benefiting from Treasury Holding's synergistic combination of sophisticated Western management practices and the intimate local market knowledge and extensive network developed through its presence in China since 2005, TCT has successfully assembled a high-quality portfolio of income-producing commercial real estate and development opportunities located in China's financial and political centers of Shanghai and Beijing.

Treasury has four offices in China: in Shanghai, Beijing, Qingdao and Hong Kong. Treasury Holdings is currently building a high quality mixed investment portfolio with its main concentration on acquiring excellent buildings or sourcing development opportunities in prime locations. It is currently concentrating its search for development and investment opportunities in the first and second tier cities in China, he said.

"Foreign investment remains a strong element in China's remarkable expansion in world trade. This is in part due to the way in which the Chinese government has opened up previously closed sectors of the economy in line with World Trade Organization requirements, he said.

The Company currently manages 3 separate investment projects in office and retail sectors located in Shanghai. Due to its long-term investment outlook, it is now a driving force in China and is identifying many exciting development and investment projects. The combination of western development management skills, together with the scale, local knowledge, and strength of local partners makes a powerful team, he said.

Mr. Harding-Roots pointed out that to enable Treasury to take advantage of its position as the predominant western developer in China and offer western shareholders a unique opportunity to gain exposure to the burgeoning Chinese property market, the Company established China Real Estate Opportunities (CREO), which listed on the AIM market in London in July 2007, having successfully raised 」259 million.

On June 21st this year, the company moved CREO's listing to Singapore, betting that investors there will better appreciate the portfolio of the Chines property assets. CREO shareholders were offered five units of Treasury China Trust (TCT), a Singapore-based business trust for every CREO share they held. TCT was then listed on SGX by introduction.

TCT provides a comprehensive platform of proactive management and through its dedicated team, numbering more than 70 on the ground in China, delivers out-performance across all elements of real estate ownership, asset management and development capability.

This combination, unique to the Chinese market, underwrites the company's commitment to a total return business model which exposes its shareholders to a broad operating platform and diversifies risk across its asset classes and revenue sources and through its development arm creates strong accretive income growth, he noted.

He said that the company's strengths are: Unique and exclusive focus on commercial real estate in China with strong opportunities for both income and capital growth; Exposure to key gateway cities in China; Long term commitment to the China market; Successful and proactive asset management of the portfolio by Treasury Holdings, thus benefiting from its extensive experience as a high quality, global property developer and investor; and, strong pipeline of investments for revenue and balance sheet growth

Speaking on the main challenges, he noted that in the real estate market, supply of land and building is the most frustrating thing, as is the ability to get experienced staff.

Since the company is focused on China, Seoul is still out of sights for the company at present.

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Mr. David Martin, Head of Retail, Commercial Property, Hongkong Land Ltd.

Founded in 1889, Hongkong Land has interests across the Asian region. In Hong Kong, the Group owns and manages some five million sq. ft of prime commercial space that defines the heart of the Central Business District. In Singapore, it is helping to create the city-state's new Central Business District with the expansion of its joint venture portfolio of new developments. Hongkong Land's properties in these and other Asian centers are recognized as market leaders and house the world's foremost financial, business and luxury retail names.

Hongkong Land also develops premium residential properties in a number of cities in the region, not least in Singapore where its 77%-owned listed affiliate, MCL Land, is a significant developer.

Hongkong Land Holdings Limited is incorporated in Bermuda. It has a premium listing on the London Stock Exchange, and secondary listings in Bermuda and Singapore. The Group's assets and investments are managed from Hong Kong by Hongkong Land Limited. The company is a member of the Jardine Matheson Group.

As noted by Mr. David Martin, Head of Retail, Commercial Property, Hongkong Land Ltd., besides Hong Kong and Singapore, the company has also substantial interest in expanding its operations in mainland China and other parts of Southeast Asia.

"The company has a very narrow focus, being interested only in high-end retail and office sites. For this reason, while we have been looking for opportunities in Seoul which is a very interesting market. All our major tenants operate in Korea. Furthermore the luxury brands market is huge, as also the financial institutions. Hopefully, we will invest soon, he said.

Within the overall commercial property portfolio of the company, retail accounts for a 20 percent, both in value and space. Specifically in Hong Kong, the share of both the retail and office space is even, he said.

Mr. Martin noted that the retail market has a huge potential in mainland China. HLL is interested in Beijing, Shanghai and other cities, but is facing difficulty in finding key sites which are generally expensive, political and in demand.

"In Hong Kong, we are hugely helped by the massive increase in mainland visitors in the past 5 years. There is growing prosperity in China and the peoples ability to shop has increased with rising incomes. This has helped the retail business and office space. Moreover, many Russian and other international companies are also investing in Hong Kong, which is a very positive development."

Speaking on HLL's performance in the first half of this year, he noted that despite ongoing economic uncertainties, demand for office and retail space in Hong Kong's Central district in the first half of 2010 was relatively robust. In addition, the Group recognized significant profits from two of its Singapore residential projects, Marina Bay Residences and Waterfall Gardens, upon their completion.

Vacancy in the Group's office portfolio in Hong Kong stood at 4.2% at 30th June 2010. Average rents remained stable and rent reversions were largely neutral. The retail portfolio in the Central district was fully leased.

In Singapore, there was growing demand from financial service companies for quality office space in Marina Bay. As a result, achieved rents were relatively firm despite the new supply of commercial space being built. Construction of the Group's joint venture development, Marina Bay Financial Centre, continued on schedule. The first office tower is now completed with the second due by the year end. Both towers, which comprise a total lettable area of 159,000 sq. m., are almost fully let. Construction of a 122,000 sq. m. third tower is underway with completion expected in 2012, of which 55% is already committed.

Marina Bay Financial Center, Singapore's first mixed-use development that successfully integrates residential, business, retail and entertainment facilities, will be fully completed in 2012. Those in the area will not only have the convenience of having 176,000 square feet of retail space at their doorsteps, they will also enjoy MBFC's connectivity, with direct access to two MRT stations via the subterranean mall. In addition, the mall offers tenants an immediate

patronage of 64,000 residents and professionals living and working within the MBFC vicinity. The second residential tower of the Marina Bay project, Marina Bay Suites, which will be completed in late 2013, is selling well with almost 60% of the 221 units sold.

MBFC is being developed by a joint venture Cheung Kong (Holdings) Ltd/Hutchison Whampoa, Hongkong Land and Keppel Land, and managed by Raffles Quay Asset Management (RQAM). The tenant-centric design of this purpose-built financial Centre combines the best in form and function, making it a key draw for businesses and befitting Singapore's position as a global financial hub.

MBFC offers a breathtaking blend of three distinguished office towers with nearly 3 million sq ft of Grade A office space, two residential towers comprising 649 luxury apartments and penthouses as well as approximately 176,000 sq ft of retail space to meet the daily convenience of our business community and residents.

MBFC achieved the Green Mark Gold for its office towers 1 & 2, Marina Bay Residences and Marina Bay Suites and the Green Mark Gold Plus for its office tower 3 conferred by the Building and Construction Authority of Singapore. This award recognizes the efforts made by the developers to encourage sustainable design practices, and makes MBFC one of the few developments to win more than one BCA Green Mark award.

The Group's joint venture in Jakarta commenced construction of a 61,000 sq. m., 30-storey tower within its existing office development in the city, due for completion in 2012.

He noted that the contribution from residential property was significant during the period. The launch in February of MCL Land's project, The Estuary, was well received and all 608 units have been pre-sold. During the period, MCL Land acquired an additional site for future development.

The Serenade in Hong Kong is due to complete in the second half of the year, and approximately a third of the apartments were sold by the end of June. The profit arising on sale of apartments in Tower 4 of the 47%-held One Central Macau will also be recognized in the second half. The Group has announced the launch of 92 branded apartments to be sold in One Central Macau, which will be managed by Mandarin Oriental following the opening of its 213-room hotel in late June.

The One Central Macau, is a groundbreaking mixed-used project for the city combining luxury residential, hotel, serviced apartment and retail facilities on a sprawling waterfront site in the scenic Nape Area.

The opening launched a new era in Macau's shopping scene as international brands opened the doors to their luxury duplex and triplex shops, all of which provide discerning shoppers in Macau with the same convenience and quality they have come to expect from CENTRAL Line Hong Kong and other fashion capitals such as New York and Paris. The list of tenants at One Central Macau includes brands like Louis Vuitton, Hermes, Gucci, Fendi, Ermenegildo Zegna, Dolce & Gabbana, Dior, Cartier, Bvlgari and Burberry, among many others. Many have opened their first, largest or flagship stores in the 400,000-square-foot, three-level shopping mall. The 200,000-square-foot site is uniquely positioned in the heart of the city on Nam Van Lake.

With a full panoramic view of the waterfront, One Central Macau comprises seven residential blocks of 32 to 38 storeys each as well as an iconic tower designed by world-famous architect Kohn Pedersen Fox, which houses the Mandarin Oriental, Macau and the most unique serviced apartments in the city. In addition to the architecturally innovative mall's prime waterfront location and impeccable list of tenants, One Central Macau is also directly linked to the MGM GRAND Macau, already an award-winning lifestyle destination.

"One Central Macau will offer shoppers the ultimate retail and lifestyle experience, with access to entertainment, fine dining, upscale residential buildings, the Mandarin Oriental Hotel and Serviced Apartments, and leading lifestyle and gaming destination MGM GRAND Macau, he said.

Another phase of the joint venture development Bamboo Grove in Chongqing comprising 261 townhouses, all but two of which have been sold, is scheduled for completion later this year. A further 427 units, including high rise apartments to be completed in later years, were released to the market and 254 had been sold by the end of June. In Beijing, sales continued at Maple Place, while development work on the Group's other projects continued. Recent government measures to dampen the market have led to reduced sales throughout the country.

Mr. Martin noted that during the rest of the year, Hong Kong and Singapore commercial property markets should remain stable. The second half result will benefit from the completion of additional residential units although the contribution will be less than in the first half with no significant completions in Singapore.

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Ms. Arlida Ariff, President & CEO, Iskandar Investment Berhad

Located in Johor, the southern gateway to Peninsular Malaysia, Iskandar Malaysia economic region is just six to eight hours flight radius from Asia's burgeoning growth centers such as Bangalore, Dubai, Hong Kong, Seoul, Shanghai, Taipei and Tokyo, and within reach of a global market of some 800 million people.

Accessible by air, land, rail and sea, it is flanked by three major ports, the Pasir Gudang Port, Port of Tanjung Pelepas and Tanjung Langsat Port. Because of its strategic location, accessibility to leading Asian cities, proximity to some of the world's most rapidly growing and important economies, and a range of attractive fiscal incentives, Iskandar Malaysia is poised to attract an exciting influx of foreign and high-level corporate investments as discerning investors look to benefit from its many advantages and high growth potential.

The special economic zone grew out of a 2005 government requested feasibility study by the Khazanah Nasional which found that the development of such a zone would be economically, socially and developmentally beneficial.

The National SJER Planning Committee (NSPC), hearing Khazanah's findings, put it in charge of developing a sustainable, holistic approach to development in the region. Iskandar Malaysia was singled out as among the high-impact developments of the Ninth Malaysia Plan, put into action by the Prime Minister of Malaysia in March 2006 to cover the period of 2006 to 2010. In November 2006, the Prime Minister, Chief Minister of Johor, Abdul Ghani Othman and Khazanah revealed the Comprehensive Development Plan (CDP).

Under the plan, five "Flagship Zones" in the 221,634.1 hectares (2,216.3 kmイ) of land covered are identified as developmental focal points. Four of these Flagship Zones are found in the "Special Economic Corridor" (SEC) of Nusajaya-Johor Bahru-Pasir Gudang. The corridor謡hich includes the significant ports of Tanjung Pelepas, Pasir Gudang, and Tanjung Langsatis prioritized for development in the CDP, with particular focus on Nusajaya.

Johur Bahru City Centre is Flagship Zone A, including development of a new financial district, the central business district, the waterfront city of Danga Bay, a mixed development in Tebrau Plentong and the Malaysia/Singapore Causeway.

Flagship Zone B is Nusajaya, with planned development of the new Johor state administrative Centre, a medical hub, an "educity", a resort for international tourism and an industrial logistic cluster and Residence Horizon Hills, Bukit Indah.

Flagship Zone C, the Western Gate Development, focuses on the Port of Tanjung Pelepas (PTP), providing a second transportation link for Malaysia/Singapore, a free trade zone, the RAMSAR World Heritage Park and the Tanjung Piai.

Flagship Zone D, the Eastern Gate Development, focuses on the Pasir Gudang Port and industrial zone, Tanjung Langsat Port, the Tanjung Langsat Technology Park and the Kim-Kim regional distribution centre. In the final Flagship Zone, Senai-Skudai, development is focused on the Senai International Airport, hubs for cargo and knowledge, a multimodal center and the MSC Cyberport city.

Due for completion in 2025, the mega-development project has been in its planning and mobilization stages for the past two years and is now in its Catalytic Development stage.

Much of the kudos for its success goes to Iskandar Investment Berhad (IIB), an investment holding company working in close partnership with the Iskandar Regional Development Authority to drive investment into Iskandar Malaysia.

IIB promotes and coordinates development to support Iskandar Malaysia. As a catalytic player in part of Iskandar Malaysia's infrastructure projects, IIB's primary goal is to seek world-class investors to bring best practice to the development.

As noted by Ms. Arlida Ariff, President & CEO, IIB develops residential, commercial, and mixed projects in Iskandar Malaysia. It also develops waterfront projects, including residences, resorts, entertainment venues, waterfront amenities, shopping centers, hotels, office suites, and multi-modal and mixed-use ferry terminals.

Formerly known as South Joho Investment Corporation Berhad, the company was founded in 2006 and is based in Johor Bahru, Malaysia with additional offices in Kuala Lumpur and Singapore.

"Our vision is to be the catalytic driver of the mega-project and achieve this by investing in selected strategic initiatives as well as through the contribution of land through sale, lease, granting of concessions or development rights."

She noted that since the end of 2006, IIB has lured over 60 billion ringgit worth of investment from local and foreign investors, exceeding its own target of 47 billion. The region has nearly met its overall foreign direct invest target of $13bn for the phase ending in 2010. To date, collectively amongst all players in Iskandar Malaysia, more than $11bn, or 92%, has been invested.

Iskandar Investment began 2010 by announcing a feasibility study with Raffles Education Corporation Limited ('RafflesEducationCorp') to develop Raffles University Iskandar, a multiinstitutional education campus in EduCity, Iskandar Malaysia. RafflesEducationCorp is the largest private education provider in Asia Pacific.

#Other recent key milestones include:

\- Construction of a 21.5-acre Stadium and Sports Complex which began in February will provide first-class sporting facilities for students and the community in Iskandar Malaysia.

\- Construction will be completed in September 2011 in time for the opening of the Newcastle University Medical Malaysia (NUMed) campus.

\- Agreement to establish Marlborough College Malaysia, the first international venture for the leading British independent, coeducational boarding school catering to the schooling needs of local and international students between the ages of five and 18. The campus is scheduled to open in September 2012

\- Collaboration with WCT, a leading Malaysian construction and property development company, to jointly develop and co-own 1Medini, the first residential development in Medini. The condominium will be launched in mid-2010 with its first phase of 300 units ready by 2013

\- Additionally, EduCity and Iskandar, the integrated education hub for Iskandar Malaysia, has also recently tied up with a world-class partner, Newcastle University of Medicine from the UK, to build its first branch campus by May 2011. The university has pledged more than $100m over 30 years to the development.

Ms. Ariff noted that IIB is looking for both foreign and local investors to contribute to the success of Iskandar.

As for the plans for this year, she said that the focus will be countries in Southeast Asia Singapore. Indonesia, China and India. Investors from these countries could become our partners in development projects or they could be buyers of our residential and commercial properties, or tenants for the retail project. We are keeping our options open.

We will still look at investors from Europe and the Middle East. Money can come from everywhere. We are a strategic developer and our main role is to drive commercial initiatives within the 2,217 sq km in Iskandar via joint venture or contribution of land. But, whatever investments we bring into Iskandar have to benefit the state and country.

She noted that the prospects are good in education, leisure, tourism and health services, especially education and health, as these are two segments that are least affected during an economic crisis.

"We have EduCity with institutions to cater for education needs from primary up to university level in the fields of medicine, hospitality, engineering and maritime. For leisure and tourism, there are Legoland in Medini and the Indoor Theme Park @ Puteri Harbour opening in 2012. We hope to bring in new retail brands."

"Apart from the property development, we are going to set up a unit this year to provide ancillary support services for property management, IT services, educational, tourism and environmental. We don稚 just want to develop a piece of land and hand over the project on completion. We want to ensure our projects are well maintained and managed in years to come, especially in 2012 when Legoland and NUMed @ EduCity are completed and operational."

Iskandar Malaysia is fully supported by the federal government of Malaysia which will be offering special incentives to investors such as tax breaks, ease of talent recruitment, lifted foreign ownership restrictions and business facilitated though a regulatory authority.

The largest foreign investor so far has been Acerinox, of Spain, which is building a steel plant for 4.18 billion ringgit. Singaporean and Japanese investors have put up 3.03 billion ringgit and 2.98 billion ringgit respectively.

She attributed the increased investments to the infrastructure that have been developed as well as the strengthening economy and fiscal incentives such as a 10-year tax exemption in Medini in Iskandar Malaysia, besides the flexibility to recruit foreign talents.

To encourage early investment, the government is offering a range of incentives, including a 10-year exemption from corporate and withholding taxes and an indefinite suspension of Real Property Gains Tax, a levy on real estate capital gains imposed in January. The suspension alone could save investors between 5 percent to 20 percent of the chargeable gains from disposal of properties which would have been taxed otherwise.

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Mr. Michael Bowles, National Director of Asia Capital Markets,

Jones Lang LaSalle Japan

The Japanese real estate market makes up a majority of the investable world of Asian real estate for institutional investors due to its sheer size and Japan`s low-risk, developed country profile within Asia.

Compared to other high growth and higher risk countries within the Asia region, Japan's real estate performance has been sluggish and effected by recent turmoil in the domestic economy and global securitization markets.

However, after posting an unprecedented steep decline in economic activity in 2009 with a contraction of 5.2%, the growth rate in Japan turned positive, rising 4.2% in the first quarter of 2010, thanks to the increase in external demand and positive effects from the government's stimulus package.

Despite policy reforms, back to basics and investment conservatism taking center stage, foreign investor interest into Japan has been positively encouraging. An anticipated rebound of the Tokyo economy, coupled with high commercial yield spreads from the size, depth and maturity of its office sector, has presented attractive buying opportunities abound this undervalued and overlooked market.

As noted by Mr. Michael Bowles, National Director of Asia Capital Markets, Jones Lang LaSalle Japan, due to its strong domestic orientation and subsequent extremely low correlation to other markets, Japan's real estate also holds strong investment attractions. In particular, stable fundamentals, lower volatility and yield spreads among the highest in the world are urging investors from abroad.

Jones Lang LaSalle, which was formed by the 1999 merger of LaSalle Partners Inc. and Jones Lang Wootton, is a leading global provider of comprehensive real estate and investment management services with offices in about 180 key markets on five continents. Jones Lang LaSalle K.K. was established in 1985. In June 2000, Jones Lang LaSalle strategically merged with LBM (Land Building Management), to establish an outstanding property management service delivery platform in Japan. In January 2006, Jones Lang LaSalle Facilities K.K was established to provide a wide range of corporate real estate services, specially focused on facilities management services for manufacturing facilities.

Mr. Bowels is National Director of the Asia Capital Markets team, which focuses on cross-border investment into and from Japan. He currently leads the delivery of sales disposition and investment acquisition services for a number of well-known multinational investor and domestic clients. In the past three years, he has advised on the cross-border acquisitions and divestments of assets located in Japan valued at $2.4 billion.

He doesn't believe that the Japanese market is saturated. He said that investors in other emerging markets like China look at a different criteria. While it is a growth story, it is riskier and less transparent. Japan, on the other hand is stable, predictable, less volatile and attracts a lot of core plus investors.

Cap rates for prime offices in Tokyo's CBD1 have stabilized since mid-2009, and some compression is now evident. The average yield spread of all reported commercial real estate transactions in Japan seems to have peaked in 2009.

In Tokyo, where the market appears to be taking longer to stabilize, the rate of rental decline is beginning to slow down. Unlike other markets, future supply is also limited when compared to the last five years; hence, now really is the time to take advantage of tenant-favorable market conditions before rents hit bottom, he said.

While there may not be many opportunities in Grade A office space, there are still other pockets of opportunity in Grade B office space. Also, while most foreign investors concentrate on the main cities like Tokyo, there are also opportunities in the suburban areas along the commuting lines. They are of good quality and offer better returns.

"Most buyers stick to central locations and do not have confidence to buy outside central locations. I realized that this is because they do not have long term experience, he said.

Since the peak in 2007 there have been significant decreases in rental levels. The rents in Grade A are bottoming out, but the worst is over."

He noted that the vacancy in Grade A is now 7 % and expected to decline. Moreover the Japanese investment market is starting to find traction and has recorded one of the largest increases in commercial real estate volumes globally, up 90% in Q1 2010. Almost half of the offshore capital in Asia flows into Japan.

Secured Capital Japan recently acquired Pacific Century Place, a Grade A office property located in the prime business district of Marunouchi, Tokyo. The 32-storey, 81,000 square meters property is one of the best known developments adjacent to Tokyo Station. The price, in excess of US$1.5 billion, makes it the largest transaction in Japan since the start

of the global financial crisis.

Foreign funds are keen to acquire prime assets in Japan. German-based fund SEB Asset Management bought a fully-let shopping center in Chiba for US$126.7 million, while RREEF Alternative Investments acquired Frontier Ebisu, an office building in Shibuya-Ku, Tokyo, for US$51.4 million.

The REIT sector has seen some revival. Simplex REIT Investment acquired the land and building of the former Mitsukoshi Ikebukuro Department Store, owned by Mitsukoshi Ltd. (now Yamada Denki Japan Head Store) in Toshima Ward, Tokyo, for JPY75 billion.

Most of the Japanese clients who want to buy offshore assets are interested in US and Europe, while being less interested in emerging markets. The Japanese companies are doing their homework on emerging markets, but are not yeat ready to invest in markets like China or Vietnam, he said.

Speaking on the outlook for the world economy, he said recent research suggests that the economic data have highlighted an increasingly uneven growth pattern for the global economy as it moves from the 2008-09 recession.

The US and Japan are now decelerating following a relatively strong post-crisis bounce both economies are still growing but only slowly. In contrast, economic growth in the UK and the Eurozone has accelerated, with Germany, in particular, witnessing record growth in Q2 which has boosted confidence and underlined a new-found strength in retailing. While China is continuing to engineer a soft landing, economic growth is still in double-digits and retail sales remain strong. Brazil and India are also motoring strongly, helping to boost their retail markets.

With the world's three largest economies decelerating, the risks of a global double-dip have risen in recent weeks, but the more likely scenario is for the world's advanced countries to move into a period of sluggish growth as austerity measures kick in. Meanwhile, emerging markets appear to be in a much healthier position - they are expected to drive the global recovery, accounting for over half of the world's economic growth during 2011.

A combination of strengthening economic growth and employment prospects, returning business confidence, improved credit conditions, rising leasing volumes and falling vacancies is underpinning a revival in the Asia Pacific investment market. Land and residential property are the main investor focus, but commercial real estate transactions have also been strong in Q1 2010, up by a further 15% during the quarter and by 43% on Q1 2009. Domestic investors, many of whom have purchased for their own occupation, still dominate,

particularly in Greater China. Nonetheless, foreign funds are still keen on securing prime assets that generate stable and secure rental income.

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Mr. Erwin Stouthamer, Principal, Composition Capital Partners

In the 2009 PERE LP Survey, Composition Capital Partners BV is the only General Partner listed as particularly admired for its thorough work and transparent communication The company has an extensive network in Europe, Asia and the US, built up over a period of twelve years. The members have strong direct real estate experience and in addition to their network, bring a broad range of skills in deal structuring, due diligence and investment monitoring. The cultural diversity of the company not only provides it with local insights, but also helps us better appreciate and understand the cultural and behavioral aspects of the markets.

Mr. Erwin Stouthamer, Principal, Composition Capital Partners:

>>Composition Capital Partners is a real estate investment management company which was founded in 2005. Prior to establishing the company, our senior management had been investing in US, European and Asian real estate markets on behalf of a large Dutch pension fund for over a decade. We specialize exclusively in Fund of Funds real estate investment structures investing with local operators through joint ventures, club deals, secondary transactions and (smaller) funds. In this way, our investors can access a real estate portfolio which is diversified in terms of managers, strategies, real estate sectors and locations. Compositions Asia Fund I was the first Fund of Funds to be launched in Asia. Our company currently works with 20 institutional investors from Asia, Europe and the US.

We have chosen to operate as a private and independent boutique firm. Our company is owned by four principals and employs 17 people in Hong Kong and Amsterdam. We are proud to have an experienced international professional team dedicated to providing a high quality of service to meet investors needs. Composition was recognized in the Private Equity Real Estate Limited Partner Survey 2009 (PERE LP Survey 2009) for their thorough work and transparent communication

Composition values its relationships with its investors and investment partners. We believe in taking the time to understand our investors requirements & ambitions and in maintaining open relationships & dialogues. We have created a substantial network of potential investment partners through our active local presence and visibility in individual real estate markets. We again believe in taking the time to understand fully the ambitions and motivations of investment partners to ensure the needs of our investors are realized. Our company has held positions on the boards of various real estate industry bodies, including Inrev, the European counterpart of Anrev, the Asian private equity real estate industry platform.

>>Our investment strategy has always been to work with the best in class local partners in accessing the best real estate deals, with a focused mandate involving clearly identified investment, operation and divestment parameters and strategies, with suitable risk management in securing returns for our investors.

With our local teams and knowledge of the markets, we believe the markets in Asia and Europe offer diverse opportunities with different time horizons and risk exposures. In many markets access to debt has become harder for many players, which we see as a great opportunity. For example, we recently have invested into recapitalization strategies in Germany and Japan involving preferred equity positions in mezzanine type arrangements where capital structures are frozen. We also have invested in value-add opportunities in the UK and Hong Kong, involving refurbishment, repositioning and stabilization of assets to yielding products for core type buyers.

>>Our company was founded on over a decade of experience and an extensive network of personal contacts in international real estate investment markets. We capitalized on this initial solid base of experience and personal contacts to build a source of reliable managers and deals for our investors. We have always believed in accessing local platforms with strong teams, alignment, deal-sourcing and execution, so maintain close contact with the local real estate markets we invest in on behalf of our clients. We believe our proximity and understanding of local managers makes us better placed to select the quality managers on behalf of our investors.

Composition has been in the Fund of Funds market since this market's inception. Our sole activity since being founded has been management of Fund of Funds. We are one of the few independent managers with a dedicated and focused product in the market. Our Asia I fund, headed by Composition's Director, Bill Shaw in Hong Kong, was the first Asia real estate Fund of Funds on launch, in 2005. Our employees, representing 10 different nationalities, have a wealth of experience in real estate development, asset management, private equity, research & consulting, and institutional investment.

We are also unique in that we have taken the lead and seed investor role in several established local platforms in fund and joint venture structures. We are one of the earlier players working in direct partnerships with local players, taking a very active role in structuring platforms with our partners and also in working closely with them through to exit stages. We believe our partners appreciate our local knowledge and resources, where our input is respected and where we sit on the advisory boards of all of our investments.

>>Composition has been investing in Korea through our fund of funds platform since 2005. Prior to the establishment of Composition, various principals and employees had been actively involved in Korea in previous roles as early as 1998. We believe the long term fundamentals of the Korean economy and its real estate markets offer interesting opportunities for our investors. We already participate in a Korea-only fund vehicle and, in addition to other potential fund investments; we are currently considering joint ventures and co-investments in Korea. We are especially attracted to the value-add opportunities which involve the repositioning, refurbishment, and stabilization of both office and commercial assets that can yield an attractive return to our investors, and upon exit, to core/core-plus buyers.

In additional to our investment activities in the Korean real estate markets, Composition is exploring opportunities to provide Korean institutional investors access to both Asian and European markets as investors in our Fund of Funds.

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Mr. Jeremy Stewardson, Executive Director, ANREV

The Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV) is the sister organization to INREV in Europe. It seeks to generate increased levels of liquidity within the Asian private real estate fund market through promoting greater transparency, accessibility, professionalism and standards of best practice. As a regional body, it strives to provide a platform for the sharing and dissemination on the non-listed real estate fund market.

ANREV now has 57 member companies in eight countries. ANREV's agenda is driven by the members, in particular the investors, and is focused on improving transparency and accessibility of market information, promoting professionalism and best practices, sharing and spreading knowledge.

The objectives are being achieved through implementing research projects such as the Investment Intentions Asia Survey, an Asian vehicles database as well as through promoting industry standards and sharing best practice through regular events.

ANREV membership is dominated by Institutional Investors and supported by fund managers, investment banks and other real estate market participants.

In January this year, Mr. Jeremy Stewardson was appointed as Executive Director of the Association. He has held various senior positions in the Asian and European commercial real estate markets, since starting with Jones Lang Wootton in Hong Kong in 1978. After 23 years with the international property consultancy in it's Hong Kong, London, Berlin, Frankfurt and Bangkok offices, he undertook a number of Asian commercial property roles, latterly as Chief Executive of the managers of Champion REIT, Hong Kong's second largest Trust. Mr. Stewardson is a Fellow of the Royal Institution of Chartered Surveyors.

Excerpts of interview:

>>ANREV is a non-profit association of institutional investors in private property funds . It draws it's membership from Pension Funds , Insurance companies , Sovereign funds and Family offices , their Fund Managers and Service Providers . It is related to INREV in Europe . It's members get together to transfer industry knowledge and best practice – all this with the aim of improving transparency in the global industry and hence accessibility for further investors .

>>For us , Korea is one of the key Asian markets . Along with Australia , Japan, Hongkong and Singapore , it has become an important pension fund and insurance industry participant . To ensure sustainable investment return levels , the Korean industry is now looking to overseas property markets as well as it's own , just as the Dutch industry did 25 years ago . By the same token , other global pension and insurance industries are diversifying into the Korean market .

So our role is to contribute to improving communications , understanding and standards in global markets for our members , to facilitate sustainable cross-border investment accessibility .

>>There are 3 legs to our Associations out put . Firstly, Research: we research our industry , the participants , the products , the volumes ,the flows and the issues and feed the analysed results back to our members . We will be launching our on-line database of non-listed property funds in Asia later this year – this database is being developed along the lines of the INREV database in Europe .

Secondly : best practice standards . We promulgate the INREV-produced Guidelines for Fund establishment and management around Asia Pacific , with supplements being produced to reflect different circumstances in the individual markets. We will be providing Implementation Workshops for members next year .

Thirdly : communications . We hold Roundtables, Briefings and Workshops on strategic and technical issues facing our industry in Australia, Japan , Hongkong and Singapore – Korea is being added to this circuit.

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Mr. Mark Inch, Chairman, Société de la Tour Eiffel

The Societe de la Tour Eiffel is a French Real Estate Investment Trust (Société d'investissements immobiliers cotée - SIIC) based in Paris. It is the first REIT in France, beginning with 2004, and specializes in office buildings and business parks in France, and also owns warehouses, light industrial areas, and nursing home in the South of France.

European REITs first appeared in the Netherlands (1969), and then subsequently in Belgium (1995), France (2003), and the United Kingdom (2007), Germany (2007) and Italy (2007).

They each have their own unique characteristics but also share common traits due largely to the fact that they are often competing for the same investors. European REITs are generally publicly-listed vehicles with corporation structures that make long-term investments in real estate and are exempt from corporation taxation provided certain dividend requirements are met.

When, in 2003, France allowed REITs this probably was the final shoot to start the REITs-race in Europe. The listed real estate market in France has increased multi-fold since then and further growth is expected.

In a sense therefore , the Societe de la Tour Eiffel, the first French Real Estate Investment Trust (SIIC) based in Paris, can be credited with pioneering this movement.

As noted by Mr. Mark Inch, Chairman, Société de la Tour Eiffel, the company started out as the managers of the Eiffel Tower (Tour Eiffel), but became just a shell company after losing that concession to the Paris town authorities in 1979.

It was put up for sale by its owner, HSBC, in 2003 and bought by two investors, Mr. Inch and Mr. Robert Waterland with the backing of Soros Real Estate Investors. This is the first time that a listed company was setup and run by people from property world as against financial companies. Both Mr. Inch and Mr. Waterland are two long standing property professionals with backing of private equity and prompted by their knowledge of the US Reit industry.

Mr. Inch graduated from University of Oxford and Insitut Superieur d'Etudes Politique de Paris. He started his career in 1973 in the real estate sector working for Jean-Claude Aaron. In 1979, he joined the Banque Arabe et Internationale d'Investissement (BAII) and from 1985 to 1990 he was Executive Director of the Bank and Chairman of its real estate subsidiary. In 1990, he founded Franconor, a real estate consulting business. He then co-founded Awon Groupe in 1995. Mr. Inch is also Director of Fondation de la Societe de la Tour Eiffel and Federation des Societes Immobilieres et Foncieres and Manager of Bluebird Holding SARL, Bluebird Investissements SARL and SNC Albion, Managing Director and Chairman of Osiris Gestion de Entidades S.L.U. and Manager of Cergy La Bastide SNC and Manufacture Colbert SNC.

"We are primarily pursuing a bottom up property approach as opposed to institutional top down financial/fiscal approach of most other French property companies. The Company has a portfolio of properties located throughout France, mainly in Paris and Ile-de-France region, as well as in Lyon, Marseille, Nantes, Strasbourg, Caen and others," he said.

The company was transformed at the outset of 2004 into a Société d'Investissement Immobilier Cotée, the first new entity under the relevant legislation promulgated in 2003. The company made an initial series of acquisitions concentrating on properties with long leases to quality tenants at modest rents.

Quoted on the Euronext Paris Exchange, the company pursues a strategy focused on the ownership and the development of quality office and business space capable of attracting a wide range of tenants in both established and emerging locations. It focuses on the acquisition and retention of high-yielding property assets, secured on long-term leases to quality tenants and has a high dividend payout policy secured from these income streams and enhanced by a selective disposal policy, he said.

Following a first capital increase of € 11 millions in December 2003, the company made a new cash call in July 2004 of € 123 millions with a € 210 million banking credit line being negotiated shortly afterwards. At the end of the year, the property portfolio stood at € 266 millions.

The first half of 2005 saw an additional € 105 millions of commitment however a quantum leap was made at the end of the year with the acquisition of Locafimo, a property company comprising 35 assets totaling 300,000 m² of floor space valued at € 285 millions.

This major transaction was partly financed by a capital increase of € 157 millions. In 2006, the company undertook a comprehensive review of its portfolio including a first disposal of non strategic assets (€45 millions of sales) whilst a move into the development area echoed increasing tenant demand for new buildings capable of providing efficient space at reasonable cost.

The company's growth enabled a progression to continuous trading on the B compartment of Euronext in March 2006. The following June, the company was included in the European Public Real Estate Association index. In May of the same year, Tour Eiffel Asset Management , Mark Inch and Robert Waterland's management company, was integrated as a fully owned subsidiary dedicated to the mother company's portfolio management. End 2006, the portfolio was valued at nearly € 1 billion and extended to 622,907 m².

At the outset of 2007, the company initiated another significant transaction with the purchase of Parcoval for € 110 millions. This acquisition completed and consolidated the company's position in the business park market notably as Parcoval was a significant co-owner in various parks alongside Locafimo which had been acquired one year earlier.

As a result of its selective disposal strategy and successful marketing of new developments, the portfolio at the end of 2007 amounted to 710 000 m², valued at € 1.2 billion of commitments.

Following 4 years of exceptional growth, the company adopted a more prudent outlook focused on maintaining cash flow through tenant retention and the concerted marketing of development projects.

This said, four modest acquisitions totaling € 40 millions were made and a 18 000 m² built-to-suite office development for Alstom was launched at Massy. Construction was also started on the 14 000 m² speculative office development in Vélizy due for delivery in 2010.

In all, some 50 000 m² of new developments were delivered, of which half was in the Parcs Eiffel, further rejuvenating the profile of the company's portfolio. At the same time, disposals totaling € 90 millions were made and a major credit facility extended to 2013 was renegotiated with the company's bankers. At year end, the portfolio comprised 713 323 m² for an unchanged valuation of € 1.104 billion despite the overall drop in market values.

In the wake of the worsening financial crisis in 2009, the company further concentrated

on the consolidation of its cash flow. The core portfolio demonstrated considerable resilience in the face of unfavorable market conditions whereas the new properties completed the previous year leased up satisfactorily, notably the Porte des Lilas, and the new business park deliveries at le Bourget, Marseilles and Bordeaux.

The 18 000 m² Massy Ampère office development was delivered to Altsom and some € 43 millions of asset disposals were achieved. At the end of the year, the portfolio extended to 670 103 m² valued at € 1 058 M reflecting the fact that the added value of new developments offset the effect of reduced values and asset disposals.

Following two years of recession, consolidation remains the order of the day against a background of gradual market recovery, notably in terms of capital values. The company continues to consolidate its cash flow whilst adjusting its financing to changed market perceptions.

Mr. Inch noted that while the French market is very attractive to foreign investors today, this was not the case ten years ago. While traditionally international investors have always invested in the United Kingdom, France was always a closed club.

"This started changing ten years ago and international investors started making a beeline. Three main policy changes can be credited with this. The first is the change in international lease durations, stamp duties and taxation policies," he said

Earlier, the lease terms available to investors were 3, 6 and 9 years which proved to be restrictive. It has now been changed to 6, 9 and 12 years. In addition, the cost of doing business was very high, as the conveyance stamp duty was 19.6 percent of each value as against one percent in UK. Today it is 5 percent in France and 4 percent in UK.

Finally, France used to tax both income and capital gains, which was a major disadvantage. , However, over the past ten years, policies have changed and France is the investors choice for the euro zone wand has even exceeded the UK market.

The commercial property market is much larger than UK at 52 million sq meters, and the occupational structure is much more diversified.

While they are two different market both UK and France are complementary, with different types of growth and income..

France has a whole lot to offer tourists and investors alike, which creates a really diverse property market. If anyone is looking for an investment opportunity in France, they will be glad to know that the possibilities are practically endless.

"It has always been an ideal location for property investors, especially. Even now, the real estate industry in France is booming despite the economic woes hovering over most of the world."

Indeed, a stable market is hard to find these days, so it is nice to know that there are many advantages of investing in France.

"Whether you are an American, European, or Asian investor, you can potentially make good profits by investing in France. Even if you have never invested in anything before, you should be able to find a profitable investment opportunity in France" he said.

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Mr. Nicholas Wong, Principal, The Townsend Group

The Townsend Group was founded in 1983 by Mr. Terry Ahern and Mr. Kevin Lynch on the premise of providing uncompromised and unbiased real estate investment advice to institutional investors worldwide. Headquartered in Cleveland, it is the largest specialty real estate investment consulting firm in the industry.

In addition to Mr. Ahern and Mr. Lynch, the team is comprised of 52 real estate professionals, including 31 Principals, Consultants and Associates and a dedicated research initiative. Townsend provides global property investment counsel to more than 85 clients on both a discretionary and non-discretionary basis, representing real estate allocations in excess of $100 billion. Its clients include public pension funds, corporations, foundations, endowments, financial institutions and Taft-Hartley plans ranging from $300 million to over $130 billion in total plan assets.

Early this year, the company opened its first office in Asia, located in Hong Kong and appointed Mr. Nicholas Wong, former managing director Asia Pacific of ING Real Estate Select, as principal to focus on business development and investment underwriting in the region. Prior to joining ING in November 2007, he had held senior positions in real estate investment and commercial banking, as well as listed securities analysis. He has been in real estate investment and finance for 22 years with the past 16 years in Asia, having started his career in the US as an appraiser.

"We already have $3.2 billion invested in the region and will focus on business development and investment underwriting in the region. The real estate investment strategies currently available in the Asia Pacific markets are unique in their ability to bring true growth opportunities to global investors," he said.

Townsend's global scale and its expertise in manager selection will ensure that the company will be able to offer investors wishing to enter these markets insights into the region that would be difficult to match elsewhere, he noted.

His team is responsible for finding best in class funds/managers and undertakes terms negotiation, due diligence and subsequent investment management, as well as business development in Asia Pacific.

"The Townsend Group is an employee-owned private company. Since 1986, when we earned our first retainer client, our exclusive focus has been providing best-in-class institutional real estate consulting services. We recognized early on that real estate as an accepted institutional investment asset class would grow not only in size but also in complexity. As a result, we structured our company to be prepared for the coming changes," he said.

Mr. Wong noted that the company began by establishing a dedicated research initiative which has been under the direction of its current Director of Research since 1989. It further broadened the breadth and depth of the team by adding the founders of two other institutional real estate consulting groups, and complementing the team with other key individuals with experience in law, finance, accounting, banking, real estate development, asset management, property management, research and academia.

As a result, Townsend has the most experienced and multi-disciplined staff in the industry. The quality, stability and depth of the team, their commitment to the development of the finest resources, capabilities in investment manager and product selection, and zealous client advocacy resulted in its consulting model being favored by the institutional plan sponsor community.

"We offer both discretionary and non-discretionary consulting services to our clients. Discretionary clients have further entrusted The Townsend Group with the increased fiduciary responsibility associated with the selection of investments subject to Townsend's discretion without the additional process of going through the clients' internal investment approval process. Townsend's basic services are similar in both discretionary and non-discretionary mandates, but the primary differences typically reside in which party retains the authority for ultimate approval of investments," he said.

In addition to the depth, stability and experience of the professional, the company offers other areas of expertise and experience relevant to clients.

"Given our extensive knowledge of and familiarity with providing consulting services to public pension funds, we are familiar with the issues facing larger public plan investors in real estate, including designing and implementing strategies across multiple sectors in the private and public markets, investing in wholly-owned properties through separate accounts, and developing investment guidelines and procedures."

Speaking on the Korean market, he noted that Townsend has historically invested in the region and finds that it has a very attractive client base.

A couple of months ago Korea's National Pension Service, the world's fifth-largest pension fund, committed to invest $300 million in troubled real estate through Townsend Group, in a separately managed account. It primarily will focus on snapping up stakes in distressed private-equity real-estate funds and recapitalizing these funds.

The move by NPS, with more than $250 billion in assets, comes as a growing number of opportunistic investors are buying into troubled property funds in deals that give them a steady return and potentially a share in the profit when real-estate markets rebound, he said.

That aside, he finds China and Japan to be the most promising markets in the region. While China is a growth story, with a booming middle class, although Japan has a greying population, there are a lot of distressed ownership of assets in the market.
As for the challenges for the group, he said there is still a lot of uncertainty about the global economy. The company is looking at getting more risk exposure across the region.

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Mr. Edward Casal, Chief Investment Officer,

Global Real Estate Multi-Manager Group, Aviva Investors

Aviva Investors is a global asset management business and a wholly-owned subsidiary of Aviva plc, the world's fifth-largest insurance group and a world leader in financial services.

The company's real estate team, based in New York, London, Paris, Frankfurt, Singapore and Melbourne is made up of over 170 people, of whom about 95 are investment professionals, including fund managers, asset managers, strategists, researchers and property finance experts.

It currently manage global real estate assets in excess of of $33 billion and already has extensive holdings in Europe as well as a growing presence in North America and the Asia-Pacific region. Of this, more than $6 billion has been invested through multi-manager strategies making it one of the largest global real estate multi-manager investors.

As noted by Mr. Edward Casal, Chief Investment Officer, Global Real Estate Multi-Manager Group, Aviva Investors, the company has been highly active over the past few years, expanding its range of funds and widening the client base.

"We have invested worldwide and on behalf of leading corporations, public pension funds, and other institutional clients, building one of the longest track records in the industry. We seek superior risk-adjusted returns for our clients by creating broadly diversified and actively managed private real estate portfolios," he said.

Mr. Casal has spent over 20 years undertaking real estate transactions on behalf of institutional investors, industrial corporations and REITs while working at Goldman, Sachs & Co., Dillon, Read & Co, and UBS. In total, he has originated and executed in excess of $20 billion of real estate transactions including both entity-level and real estate property-level transactions. Immediately prior to joining Aviva Investors, he served as Chief Executive Officer of Madison Harbor Capital, a real estate multi-manager firm he co-founded in 2003.

He is a member of the Urban Land Institute, the International Council of Shopping Centers and the Pension Real Estate Association. He is also Chairman of Madison Harbor Balanced Strategies, Inc., an SEC-Registered real estate fund of funds.

Mr. Casal noted that his current team is one of the largest dedicated real estate multi-manager groups in the industry with investment professionals based in New York, London and Singapore.

"We provide local market expertise and manage relationships throughout Asia, Europe, and the Americas. Our global investment committee, comprised of members from each region, assures consistency in the approach and execution of our strategy."

The real estate team is based in London, Paris, Singapore, Dublin, Frankfurt and New York. The global team is made up of 180 people, including 90 investment professionals, including fund managers, asset managers, strategists, researchers and property finance experts. Mr. Casal's team is one of the largest dedicated real estate multi-manager groups in the industry with investment professionals based in New York, London and Singapore.

The group has a comprehensive range of products and services, offering real estate investors a unique combination of strengths: significant scale, impressive people, a comprehensive product range, excellent service and an outstanding reputation for innovation.

For institutional clients of scale, the group has created segregated portfolios by investing in a range of real estate ventures. These portfolios are customized reflecting the client's individual objectives with respect to risk and return, geographic sector allocations and cash flow requirements.

"Aviva Investors has extensive capabilities with commingled investment vehicles. We seek to design portfolios with the core objective of consistently achieving superior risk-adjusted returns for our investors on a highly diversified basis," he said.

Based on their view of the appropriate strategies for economic conditions, the group seeks to invest in newly-formed real estate ventures sponsored by managers with strong trace records that our experience and research suggest are best-suited to achieve our goals.

"Further, we seek to design a portfolio that ensures appropriate diversification with respect to geography, strategy, manager, property and asset type, capital structure, duration and asset lifecycle," he said.

Aviva Investors is also a discreet and fast moving buyer of secondary interests in private equity real estate. The team looks at opportunities of all types and in all locations across Europe, the Americas and Asia.

Mr. Casal also noted that the private equity real estate secondary market offers opportunities to acquire specified assets that are well advanced in the investment program. A secondary transaction involves the purchase of one or more limited partnerships or similar interests from the original investor, providing that investor with liquidity.

Speaking on the main challenges, he said that while global growth is rebounding from the depths of the financial crisis, uncertainty regarding the medium-term direction of the global economy is significant, as the fiscal imbalances remain unresolved.

"We continue to structure investment portfolios with the underlying assumption that the developed economies will fluctuate as deleveraging pressures in both the private and government sectors create strong headwinds against relatively strong business financial conditions. Therefore, relatively conservative investment strategies are warranted. The emerging markets have shown very strong recoveries, but we have to be cautious due to the risk of overheating."

Accordingly, he said that real estate investing activity in the developed world should remain tilted toward defensive strategies rather than aggressive growth oriented objectives. Even within emerging markets, growth expectations must be undertaken only with a rigorous value exercise in order to avoid disappointing investment results due to premium pricing driven by excessive weight of capital overwhelming thin investment markets.

The real estate universe is vast and includes many assets with income-producing characteristics that reduce risk. Real estate investment should appeal strongly to investors during a prolonged period of uncertainty and risk-aversion, in particular because investment strategies can be devised to capitalize on many of real estate's innate defensive qualities.

"Our investing strategy reflects this multi-speed view of the world, with a defensive bias. While in all markets value investing predominates, in the developed markets we continue to avoid development risk and strategies dependent on a robust consumer discretionary spending, and continue to participate in recapitalizations of real estate ownership vehicles."

In the emerging world, growth strategies can be tolerated, particularly those that address continued urbanization and growth of middle class wealth. Nevertheless, it is imperative to remain cautious and vigilant regarding valuation bubbles in formation, he said.

Mr. Casal noted that Asia is a large opportunity for the company, having invested in the region for only 3 years now. This year, plans are to expand investments in Australia, Japan, Korea, China , Singapore, Hong Kong and India. The main client targets are cash rich- time poor investors.

"We provide local market expertise and manage relationships throughout Asia, Europe, and the Americas. Our global investment committee, comprised of members from each region, assures consistency in the approach and execution of our strategy," he said.

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Mr. Lee Jung-whoon, General Manager, Finance & Investment Dept.,

Korea Asset Management Corporation

KAMCO has been making contributions to the national economy by helping overcome crisis and develop the economy through various supporting measures for the financial industry.

Nonperforming loans (NPLs) were at the heart of the financial crisis that engulfed the Korean economy during 1997–98. The recovery has also been characterized by a rapid and drastic reduction in the level of NPLs in the financial system.

The government played a leading role in financial and corporate restructuring, including strengthening the legal and regulatory framework, injecting public funds, and reinforcing the functions of nstitutions for crisis management, such as the Korea Asset Management Corporation (KAMCO).

KAMCO played an important role in facilitating the restructuring process and helping to develop financial markets. First, KAMCO purchased distressed assets from banks and other financial institutions, which allowed lending to resume at a time when liquidity was scarce. This objective was complemented by increased supervision to ensure that banks were operating on sound commercial principles.

Second, KAMCO's resolution of NPLs contributed to the good progress made in Korea in recovering public funds injected by the government for financial sector restructuring. In addition, KAMCO disposed of many of these distressed assets through a number of innovative methods, including by issuing asset-backed securities (ABS), which launched an important new market in Korea.

Mr. Lee Jung-whoon, General Manager, Finance & Investment Dept., KAMCO, speaks about the crucial rope played by the organization and its role ahead.

Could you give us a brief introduction to KAMCO?

Since its inception in 1962, Korea Asset Management Corporation has been making contributions to the national economy by helping overcome crisis and develop the economy through various supporting measures for the financial industry.

During the Asian Financial Crisis in 1997, the national economy was facing the Asian economic crisis. In order to efficiently resolve non-performing loans (NPL) of financial institutions, KAMCO formed the NPL Resolution Fund of 39 trillion dollars, and acquired 111 trillion won of non-performing loans. And since 2009, with a view to proactively coping with global financial crisis, KAMCO has been operating the Restructuring Fund, as a full-time organization for restructuring process.

In addition, KAMCO is in charge of government-commissioned work such as state-owned property management, collection of overdue taxes, and assistance for consumer credit recovery. After the incumbent CEO Young-chul Chang took office, we categorized domestic properties into three: state-owned, financial, and credit properties. KAMCO is trying its utmost in managing all three categories as a comprehensive asset manager of the properties owned by the Korean government.

What is the performance of the NPL Resolution Fund and the Restructuring Fund like?

Using the NPL Resolution Fund, we collected 6.2 trillion won additionally to the amount of public fund invested, by acquiring non-performing loans of the face value of 111 trillion won and resolving 71% of them up to now.

In this process, we also converted some of the non-performing loans into equity, transforming them into blue-chip companies and selling them in the market. Some noticeable examples include Daewoo Heavy Industries & Machinery Co., Dongah Construction Industrial Co. Ltd., and more recently sold Daewoo International.

With lessons learned from the Asian economic crisis, we were able to proactively deal with the recent global financial crisis, by early establishing the Restructuring Fund. Since 2008, we have purchased PF bonds of 8.5 trillion won, swiftly and actively responding to the destabilizing factors of the financial market. In order to support shipping industry in liquidity crisis, KAMCO formed a shipping fund, having purchased 27 ships (worth of 860 billion won) so far.

We understand that your department is responsible for KAMCO's overseas business. **What is the progress and future plans?**

KAMCO's overseas business was launched with the mandate of assisting private sectors in overseas market creation and creating future growth engines of KAMCO, utilizing various domestic and international networks and experiences learned from the post-crisis process of resolving 111 trillion worth of NPL and performing corporate restructuring.

Investment preparedness provided through the revision of law to enable direct investment between 2005 and 2006 and triggered full-scale implementation of the overseas business.

In the first round, in 2007, KAMCO acquired properties from a Chinese state-run AMC, followed by the successful investment brokerage in 2008. Afterwards, KAMCO established a local AMC with dispatched staff, and has been in full operation for management and collection.

Our view on the market indicates that, after the global financial crisis, it is high time for us to enter the NPL markets of advanced countries including the US. We are thus currently cooperating with domestic and overseas institutions to screen blue-chip investment grade targets.

This year has goals of exporting KAMCO Model, which is business knowhow accumulated through our on-going training and consulting business for developing countries, and successfully implementing pilot deals of investing in NPL in advanced countries such as the US.

Does it mean that KAMCO is also offering training for overseas institutions?

Yes. Since 2001, we have been providing training courses on our knowhow of NPL resolution and restructuring process, accumulated through overcoming the Asian economic crisis, for many governments such as China, India and Vietnam.

A total of 22 rounds of training courses have been completed, with a purpose of maintaining close relationship with organizations of other countries. In addition, we have concluded MOUs with 17 government organizations from 11 countries, contributing to the heightened international status of KAMCO.

Recently, local pension funds have been showing great interest in US real estate market, with some investment projects already initiated. What is impressive is the speed of the movement by public corporations. Do you have any experiences in the US market? What are they about?

There has been a series of prospects that says the US market shows a sign of recovery starting with the corporate sector, as recently seen in the continuous increase of corporate fixed investment. Both IMF and many IBs are competing in upwardly adjusting future economic growth rate assumptions.

However, a general consensus of the international financial community is that it will not be easy for a huge market like the US to recover in a short period of time. Examples include the increasing non-performance of commercial assets and continued bankruptcies of small-and-medium-sized banks.

KAMCO has also been monitoring the US market for investment ever since the financial crisis, with some cases almost striking the contract. But basically we are still focusing on risk management based on conservatism.

For example, it was in 2008 when we were conducting a preliminary underwriting for the purchase of a 450 million dollar portfolio owned by a global IB, reaching the stage of price negotiation. It was late August. The seller insisted that the asset price was almost bottoming out, but our underwriters said that there would be further dip of about 15% or more. Obviously, the deal was not possible to be closed.

After the failure of negotiation, our underwriting team backed out. And on the 15th of September, Lehman Brothers declared bankruptcy, suddenly elevating the financial risks all around the world, ultimately causing steep rise of foreign exchange rates in Korea and aggravating the investment environment.

So, it turned out to be a good thing that you had to break the deal?

Sure. The asset value was plummeting afterwards, as we had anticipated. And the foreign exchange rate increased by almost 50%. Even if the price was successfully negotiated, it must have been difficult to close the contract.

That was a very clear example of risk management. Also in 2009 and 2010, we had some cases of reaching the point of price negotiation, but we had to use our conservative stance again, believing that there was a possibility of further price drop.

Could you explain the nature of the investment business of KAMCO?

Our target focuses not only income generation but also assistance for the private sector in their overseas business. To do the latter, we are informing Korean institutional investors of high-grade investment targets and helping them with asset management.

Of course, to lead the overall deals, we also need to make some investment at the threshold level. We are also planning to establish JV-AMCs with local organizations, through which we can learn the systems of the countries to be invested and accumulate asset management knowhow. In China, where we had two deals closed, we have already established an AMC, gathering information on local investment systems and grasping the knowhow of asset management.

I am not saying that investment yield is not important. What I mean is that it is an important point of consideration that the intangible assets also need to be acquired at the same time. Domestic pension funds are also welcoming the business structure in which KAMCO participates in overall asset management.

The investment business will start from small-scale projects in advanced countries where the cycle is widely believed to be bottoming out. After making successful investment, we will expand the scale by phase.

First, we plan to start with selective high-grade investment targets out of troubled assets such as NPL or REO owned by local financial institutions. Currently, with a view to acquiring assets under bulk sale by FDIC, we are currently under joint consultation with an organization with successful bidding experiences.

There must be some difficulties experienced by a public corporation like KAMCO in dealing with IB business.

KAMCO has amassed a high international credit standing and credibility with fair business treatment, which are great advantages of our actual implementation of projects.

Currently, we have some difficulties in proactively exploring potential high quality projects, because of the limitation posed by the KAMCO Act, which stipulates that investment targets should be confined to the NPL Resolution Fund. However, we are planning to expand the target investments to the Restructuring Fund by amending the act.

And the issue of relatively long decision-making process as a public corporation could be substantially overcome by sharing roles with private counterparts.

Do you have any parting comments for our readers?

According to the IMF estimation, the total loss incurred by financial institutions worldwide amounts to 4,000 trillion won, with US and European markets alone at 2,000 trillion won.

When it comes to NPL markets of advanced countries, the barrier of entry used to be too high in the past. But, in a couple of years ahead, it is expected that opportunities will come for us to purchase high-quality assets at lower price. That might be a once-in-a-life-time chance, though.

We will do our best in actively and fully utilizing various experiences and rich networks of KAMCO, rather than neglecting them, so that KAMCO can be leading liquidity in the private sector toward more stable investment targets, thus contributing to the national wealth creation. This, I believe, is the true mission given to a public corporation.

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Mr. Joyce Lo, Associate Director – Head of Corporate & Investor Strategy, Sniper Capital

Sniper Capital was established in 2004 to capitalize on the many property development and investment opportunities offered by Macau's burgeoning economy. Since then its business has grown considerably.

Today the company employs 25 dedicated professionals working on a portfolio that has expanded beyond Macau's city limits to include the Western Pearl River Region of Southern China.

Sniper Capital utilizes a broad array of in-house capabilities to efficiently execute every aspect of the investment and development cycle. Its dedicated focus on research and acquisitions, project development, asset management, fund administration, capital raising and investor communications allows the company to act both independently and swiftly to maximize returns on each project. Joyce Lo, Associate Director – Head of Corporate & Investor Strategy, Sniper Capital, spoke to us about the company's plans as well as prospects for the Macau market.

Could you give us some background of your company and your major projects?

Sniper Capital Limited is an independent property investment manager specializing in property investment and development in niche and undervalued markets. Today, the firm manages two funds – the private closed-end South China Sniper Fund (SCSF) and London Stock Exchange Main Board listed Macau Property Opportunities Fund (MPO) – with combined assets of $350 million.

MPO is an opportunistic investment fund that focuses on delivering long term returns from the investment and development of high quality properties in Macau and China's Pearl River Delta. The portfolio properties are generally of medium to larger sizes. SCSF acquires niche, small sized properties in districts which have yet to reach their full potential, and creates value through the amalgamation, redevelopment and repositioning of these properties into retail and food and beverage outlets.

Since November 2010, Sniper Capital has begun officially marketing the Macau Sniper Fund, a $100 million private fund that adopts a strategy similar to SCSF. With over seven years of experience operating in the Macau and Southern China property markets, Sniper Capital has established a strong track record in sourcing, planning and redevelopment, including working with sensitive heritage sites and old buildings. Recently, Sniper Capital has also started leveraging its sourcing and acquisitions expertise and extensive investor reach to build an investment advisory business.

Sniper Capital's in-house expertise covers every aspect of the investment and development cycle, including research, site acquisition, project development, asset management, investor relations and finance.

Within MPO, major portfolio residential projects include The Waterside (luxury residential leasing) – Tower Six of One Central Residences, the most prestigious residential project in Macau – and The Fountainside (low density residential development) – 42 apartments catering to middle- and upper-income locals. Other key assets include a retail development in Senado Square– located in the heart of Macau's popular tourist and shopping district – and APAC Logistics Centre (warehousing and logistics) – close to the recently-opened Guangzhou-Zhuhai rail network and the Hong Kong-Zhuhai-Macau Bridge, currently under construction.

We have also recently entered into an agreement with a local Macau developer to sell our Rua do Laboratório project (entry level residential) for $41 million, representing a net return on investment of 84%, upon the sale completion expected in April 2011.

On the private funds side, the Group is involved in a number of non-gaming destination creation projects through the conversion of older, Portuguese-colonial style buildings into retail outlets that can be leased to attractive bars, restaurants, and niche shopping designed for the enjoyment of both locals and tourists. These new landmarks are rapidly becoming places of choice for people who want to experience the vibrancy of the new Macau as well as the rich 500-year history that the territory's historic areas have to offer. These unique projects, which have been conceived in conjunction with Macau's dedicated Heritage Department, are in complete contrast to the cutting edge designs of the nearby casino hotel resort projects.

Why are you focusing on the Macau market and what are the investment opportunities?

The firm's principals, Tom Ashworth and Martin Tacon were attracted to Macau's potential after its 1999 handover from Portugal to China, and the local administration's decision soon after to break the 40-year gaming monopoly held by Stanley Ho and allow foreign casino groups to open resorts. Once a sleepy fishing village, Macau is today by far the world's largest gaming market, generating $25 billion in casino revenues and welcoming 25 million visitors a year.

We continue to believe that Macau remains in the early stages of a period of sustained economic growth. A new round of mega resort expansion in Cotai, coupled with ambitious infrastructure projects such as the Hong Kong-Zhuhai-Macau Bridge, PRD inter-city rail network and Macau Light Rail Transit system all point to an increasingly dynamic and rapidly growing economy. Macau remains well positioned to benefit from the opportunities that will arise as a result.

Non gaming Retail and Food & Beverage

Non-gaming currently accounts for less than 20% of Macau visitors' expenditure. The heavy focus on Macau casino projects has left Macau with a significantly underdeveloped non-gaming entertainment and leisure market. Underscored by the government's commitment to diversify the economy, Sniper Capital expects the proportion of non-gaming revenues to increase exponentially in the coming years. Looking at the evolution of Las Vegas – where half of visitor expenditure today is allocated to non-gaming activities – we believe there is a great deal of potential upside by focusing on non-gaming real estate in Macau.

Residential

The entry of the international casino and resorts has lifted the benchmark for an improved standard of living in Macau. There is an increasing demand for high quality housing in prime locations from both expatriates and the more affluent locals looking to upgrade. Unemployment in Macau has dropped to a historical low of 2.7% while median monthly incomes are on the rise. There are also favourable government initiatives that spur demand for affordable accommodation from first time local buyers. Macau's residential property market – which rebounded strongly post the financial crisis – is still exhibiting good value. According to Jones Lang LaSalle, capital values for the high end residential market rose by 9.6% in 2010. The modest upturn in Macau's residential property market, compared to Hong Kong and other regional markets, is expected to continue benefitting from powerful local drivers and high levels of affordability.

Logistics

The construction of the $11 billion Hong Kong-Zhuhai-Macau Bridge will create a critical transportation link between western and eastern Pearl River Delta (PRD). When completed in 2016, travelling time between Hong Kong and Zhuhai will be reduced to a mere 30 minutes. To capitalise on increasing opportunities arising from the rapid economic integration of the PRD region, MPO is developing APAC Logistics Centre – a state of the art warehousing and logistics facility in Zhuhai.

What are the major differences between Macau and other Asian countries?

Macau, the only gaming jurisdiction in China, has since 2006 replaced Las Vegas as the largest gaming market in the world by gaming revenues, and are now almost double that of Nevada and New Jersey combined. Figures show that one of Macau's casino groups – SJM – has revenues that exceed those of the entire Las Vegas strip.

CLSA expects Macau's nearest rival, Singapore, to hit gaming revenues of $6.5 billion this year, on par with that of Las Vegas, but behind Macau at $30 billion. By 2012, Singapore is expected to rake in $8.1 billion, ahead of Las Vegas at $6.8 billion but still a fraction of Macau's forecasted $34.7 billion.

Underpinned by strong fundamentals, Macau is set to be Asia's fastest growing economy, at an estimated growth rate of 30% in 2010. With less than 30 square kilometer of land, Macau has the highest population density at 18,835 per sq km as well as one of the highest GDP per capita of $48,000 in Asia.

Aside from outstanding economic fundamentals, Macau, the oldest European colony in East Asia and the most recently relinquished colony in the world, boasts almost 500 years of rich Portuguese heritage. The government has established an official heritage department to preserve the unique blend of Chinese & European in architecture. The fusion of these cultures is also prevalent in the cuisine and the population.

In addition, Macau is the only place in China that has freehold land, although there is not necessarily a price differential between leasehold and freehold.

What differentiates Sniper Capital from other Boutique houses?

Our independence and minimal bureaucracy make us nimble and innovative. Our culture is highly entrepreneurial which encourages lateral thinking and attracts self-driven personnel.

As our name suggests, we are highly focused on certain markets and segments. We are attracted to "below the radar" properties that are often overlooked by larger developers. Moreover, we have the technical knowledge and capability in working with heritage sites. At this point, we are the only major foreign fund manager that is established and continue to grow in Macau. We believe in having local presence with our team developing a vast network of proven and established contacts in the markets in which we are operating. This fuels our ability to source, acquire and manage quality investment opportunities with strong value propositions.

In addition, we possess excellent in-house resources to across the entire investment cycle, delivering value enhancement through planning, development, asset management and eventually through a successful exit.

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Mr. Rong Ren, Managing Director & CEO, Harvest Capital

Currently managing about $1.8 billion in five funds and generating returns of over 20% IRR, Harvest Capital Partners brings together an unparalleled cross-border and cross-disciplinary team of property investment professionals. With the backing of its majority owner, it is uniquely positioned to identify and capitalize on prime and off-market transactions in China's dynamic property development market.

The company was named "Asia Firm of the Year" by PERE magazine in the Global PERE 2010 Awards and "Property Investor of the Year - China" by The Asset magazine in the 2010 Triple-A Investment Awards. These awards are among the most prestigious accolades for the global private equity real estate industry.

Mr Rong Ren, Managing Director & CEO, Harvest Capital, spoke to us about the company's goals and his perspective on the Chinese property market.

Could you give us a brief background on your company?

Harvest Capital Partners is a boutique investment firm that specializes in real estate investment funds focused on Greater China. We have a solid track record in the full property investment cycle, from raising capital and developing properties to managing these assets, exiting from our investments and returning capital. We are one of the few China real estate investment managers that can say that we've delivered 20% IRRs for our investors since 2006.

The approach we take is based on a disciplined investment model, incorporating an absolute return, value-driven strategy, to achieve medium- to long-term capital appreciation for investors. What makes us different is our hybrid-business model, in that we not only invest capital but also get actively involved in developing and managing properties. This allows us to add significant value to our projects, which we would not be able to do if we were simply passive investors.

Our portfolio of real estate funds is focused on selected regional cities, which have a large population base, high economic growth and rapidly increasing per capita disposable income.

Based on these criteria, we invest in the Bohai Gulf Region, Yangtze River Delta, Shandong Peninsula, and the Pearl River Delta, including Hong Kong. We are committed to creating maximum value for all of our investments by providing expertise from land acquisition, project development through to asset and portfolio management.

Our investments cover a focused array of asset classes, covering residential and retail properties, office buildings, hotels and serviced apartments. Specifically, we target assets that are unique either in terms of location or where significant value can be created and enhanced through refurbishment, repositioning, development or redevelopment, thereby capitalizing on the strong demand for asset dispositions in China.

Another strong advantage we have is the full support of China Resources Group, which gives us unparalleled access to a strong network in both first and second tier cities in China, where demand is fuelled by urbanization and strong fundamentals in a rapidly growing economy.

Our entire team is passionately committed to these principles, and we all take our fiduciary responsibilities to our LPs very seriously. Being a member of ANREV is also important as it helps us pursue best practices in the funds management industry and increase transparency for our LPs. We manage capital on behalf of others, so we understand the need to manage our investment risks carefully in order to achieve the best possible returns.

What is your investment strategy and what asset classes do you think are providing the most promising returns? What cities have the biggest upside potential?

It is sometimes misleading to think of China as one market. Depending on our investors' risk appetite, investment horizon and objectives, we look to tailor specific investment strategies for them.

For example, while there is a lot of media attention on the government's efforts to cool down the residential market, we feel this is a good time to invest. Various developers are facing liquidity constraints because of the government measures, and we are starting to see good deal flow in the residential sector.

Based on our market read at this point in time, we are looking at:

Mid-market retail in Tier 2 and Tier 3 cities in China, which are benefiting most from the urbanization trends and supported by strong retail consumption

The affordable housing sector, which is currently being supported by governments at all levels

Selected office investments in Tier 1 and Tier 2 cities, which will benefit greatly from the increasing long term capital that is emerging in China's capital markets

Selected mixed use developments on an opportunistic basis, and

Guaranteed yield products backed by high credit quality developers.

So as you can see, the opportunities and deal flow in China remain strong and Harvest Capital is well placed to continue to offer our LPs — both foreign and local — investment opportunities that fit their risk appetite and investment objectives.

There is an on-going debate among industry experts on India versus. China. What are the major differences?

We're not qualified to comment about the opportunities in India, as our mandate and expertise is primarily in China. I'm sure both countries offer excellent opportunities as their overall demographics are quite similar.

However, based on discussions with investors, I see one key difference being the Chinese government's efficiency in planning and encouraging a sustainable investment market through clear regulation, building infrastructure that supports property investments, and establishing a market environment conducive to making a decent return.

The government coordinates its planning very well and makes it easy for investors in China to see its intentions. For example, this year's 12th five-year plan is quite clear about social development, stimulating domestic consumption, reducing the income gap, promoting environmental awareness and increasing the value of China's industries. Hence, as an investor in this market, you can anticipate what strategies are sustainable over the coming years and plan accordingly. I think that's a huge advantage.

There is a stiff competition among foreign and local fund managers try to raise capital for China. What sets you apart from other players?

The Chinese market is full of opportunities, if you know where to look. There is also plenty of room for competition, which we feel is good for the development of the market.

Harvest Capital is different from most private equity real estate players in the market as we are truly local. Being part of the China Resources Group, a State-owned Enterprise, also has its advantages. Our networks and pipeline of opportunities are genuinely deep. All of our investments are sourced off-market, and our key focus is to buy into investments at a reasonably low cost. What's more, having an extensive footprint in the country gives us access to proprietary research and information not available to others.

As a local player, China's real estate market is not opaque to us and we are able to make informed decisions when we assess investments in different cities. Another key difference is that we have a hybrid business model with significant asset management capabilities. We're not just a financial investor.

The team at Harvest Capital is also very experienced, bringing together both local and foreign expertise within an international best practice framework.

All of these factors resonate with our investors and the industry, which I think accounts for us receiving the award from The Asset magazine and being the first Chinese firm to win Asia Firm of the Year at the Global PERE Awards.

What are the best market entry strategies as a foreign investor?

I think some investors underestimate the partnership risks in China. We advise anyone looking to invest in China to find a suitable local partner. China is still a market that requires significant local expertise, due to the general lack of transparency and the sheer geographical scale.

It remains challenging to invest directly in China but having a good local partner will help smooth over "local" issues. Even more importantly, investors should look at China as a long term investment destination.

At Harvest Capital, we try to build long-term relationships that add value to our partners in numerous ways, such as utilizing our asset management capabilities to increase returns. We can also bring our networks and relationships to the partnership, such as tenant relationships, government relationships or banking relationships. Essentially, we can act as a "bridge" between our investors and China, and our LPs can look to us to manage the local risks as best as we can, leveraging on our expertise to deliver the best possible risk adjusted returns.

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Mr. Robert Gilchrist, Founder & CEO,

Rockspring Property Investment Managers LLP

Rockspring Property Investment Managers LLP, now in it's 27th year, specializes in the acquisition and management of commercial property throughout the UK and continental Europe on behalf of over 220 major institutional clients from around the globe. On behalf of single-client accounts, investment is made either directly into property assets or, indirectly, through the group's series of tax-efficient, co-mingled investment funds.

Originally established in 1984 as MIM Property Services, Rockspring was one of the first UK-based property managers to specialize in European investment. Working exclusively with institutional investors, the business grew quickly, and in 1993, was bought by Prudential Financial of the USA and became PRICOA Property Investment Management. Following an MBO in 2004, Rockspring Property Investment Managers, as it is known today, was formed. Fully independent and 100% owned by its Partners and employees, Rockspring is headquartered in London with its own network of local investment and asset management offices in Amsterdam, Berlin, Brussels, Budapest, Madrid, Paris and Helsinki. In addition, Rockspring manages client support and services operations via dedicated offices in America and Australia and is in process of opening one Seoul.

Rockspring offers its clients a diverse range of products, from region-wide, pan-European funds to single country and sector specific specialist vehicles. These include the Rockspring Hanover Property Unit Trust, the Rockspring PanEuropean Property Limited Partnership, RockspringTransEuropean II, III, IV & V, The Industrial Trust, Retail Plus, The Rockspring German Box Fund, The Rockspring Portuguese Property Partnership, Rockspring Total Europe, Rockspring UK Value Fund and single client mandates. With property assets currently located in the UK and 12 other European countries, the firm today is one of Europe's leading property investment managers.

Robert Gilchrist has been with Rockspring for over 23 years and has been active in the European property markets since 1983. After graduating from Cambridge University, he qualified as a Chartered Surveyor and joined Rockspring in 1987. He has been the architect of much of the firm's significant growth, in particular, the development and launch of new fund products. The first of these was the launch, in 1991, of TransEuropean 1 and the subsequent management of this series of closed-ended funds – TransEuropean V is currently being marketed. In 1998, he was appointed Managing Director. In 2004, alongside Mr. Richard Plummer, the Chairman, he led the successful MBO from Prudential Financial, and was appointed Chief Executive. He has played a leading role in growing Rockspring into one of the UK's leading Europe-wide property investment managers and he continues to be closely involved in new business and overseeing the fulfillment of Europe-wide investment strategies.

Rockspring prides itself on its client-focused approach. "As all of our investment products are funded entirely by equity sourced from third-party, international, blue-chip, institutional clients, everything we do is based on our clear understanding of investors' needs and ambitions. We invest the time getting to know them and we apply our exceptionally experienced market knowledge and independent status to find solutions that are the ideal fit. It's an approach that has been proven in every corner of the commercial property market and enabled us to build enduring relationships with leading real estate investors from around the globe," said Mr Gilchrist.

The recent awards received by the company recognize Rockspring's enduring commitment to generating value through real estate for its international blue-chip client base. They include 'Europe Firm of the Year' - Global PERE Awards 2010, 'Property Fund Manager of the Year' – Financial News / Dow Jones Awards for Excellence 2010 and 'Property Manager of the Year' - Global Pensions Awards 2011. Mr Gilchrist, commented, "We have spent more than 25 years finding new and innovative ways to create value for our clients. Today, we are fully independent in both structure and spirit and, with a Europe-wide network of property professionals, we work in partnership with our clients to create unique, performance-orientated European property investment vehicles."

Mr. Gilchrist noted that Rockspring frequently works with global investors looking to invest for the first time in Europe. "It really does help having an experienced local presence throughout Europe." comments Gilchrist. "Our network of offices across Europe combined with our long history and knowledge of its markets puts us in an exceptional position to advise our clients. For investors that are not inclined towards our tax-efficient co-mingled investment funds, we can assist them co-invest directly in hand-picked assets with other like minded investors in Europe."

Whilst few investors escaped the global melt down, Rockspring have fared better than many of their competitors. Their core / core plus investment approach combined with their consistent track record and client-centric focus meant investors not only stuck by them, many committed new capital – during 2010 Rockspring closed their UK Value fund with £700m. In 2010 Rockspring invested €1.2 billion across Europe and to 31st March 2011 has seen investments totalling €380m. Notable recent transactions include:

88 Wood Street – acquisition of an iconic, landmark tower building at in the heart of the City of London for £183 million on behalf of a separate client mandate (November 2009)

O'Parinor Shopping Centre, Paris – acquisition of a 51% stake for €223 million on behalf of a separate client mandate (August 2010)

Ferio Shopping Centre, Konin, Poland – acquisition of a retail park for €47m on behalf of the TransEuropean Property Limited Partnership IV (Dec 2010)

The Feulner Portfolio – acquisition of three retail warehouse properties in Neuss, Kassel and the Emspark in Leer, West Germany purchased off-market from a private investor for a total consideration of €62.2 million on behalf of the Rockspring German Retail Box Fund (April 2011)

Speaking on the economic situation in Europe, Mr. Gilchrist noted that the debt crisis has affected everybody around the world in varying degrees. This has resulted in recession in many countries, but has also led to varying responses by national governments. In Europe, there continue to be large regional differences. Greece continues to experience recession, while the Spanish and Portuguese economies have been experienced flat growth. Individual governments are using differing approaches to reduce budget deficits, he noted. This crisis halted the incessant rise in property values that took place from 2003 to 2008, driven as much by the widespread availability of cheap debt as a lack of seasoned understanding of real estate fundamentals.

"We are seeing a steady recovery in economic prospects and confidence in markets. Today a lot of focus on significant fallout has been on Ireland, Portugal, Spain and Greece. They continue to highlight some of the ongoing issues in the European periphery." said Gilchrist.

However, the recession has not resulted in a significant amount of distressed assets coming onto the market. For instance, in UK there was a peak-to-trough fall in asset values of around 40 percent, but the period of decline was swift and subsequently experienced an equally fast recovery.

"Distress will come about largely as a consequence of the behaviour and reaction of the banks. There is a lot of talk about 2008-9 being one of worst recessions but in my experience 1990-93 was actually worse. The problem then was that a construction boom coincided with recession and oversupply in real estate was much greater then," he said. The banks, having learnt their lesson, are choosing to hold on to assets today and working through problems before selling them in a steady and unforced manner.

In this context he noted that Korean investors who are selectively looking for landmark assets in UK and Paris are doing so at the right time. "The real estate fundamentals are better. While people may be scared of lower cap rates today, they actually reflect significant rental growth expectations. Their timing is perfectly reasonable and making investments today is safe."

Typically non-EU investors look at London and it makes sense. London sits alongside New York, Sydney and Tokyo as a global city. It is very much on the radar screen, with Paris a strong second. More adventurous investors may be looking at Germany, Spain or other smaller cities in Europe, but they are in a much smaller proportion.

"One of the reasons I am extremely positive about prospects for investment and ownership in London and Paris is because we are in the middle of the globalisation of everything. Looking back at the London market in 90's there were only a couple of Japanese, American and European investors. The predominant ownership was by UK institutions. Since then, the market has changed dramatically. Now there are Koreans, Australians, Canadians, Russians and Malaysians to name a few. This is not going to stop."

In terms of core assets and core market, there is, inevitably, only a limited supply and so competition can be quite intense for investments in the core sectors.

He noted that there isn't just one 'right' answer to the question of how the investors should approach the UK market - either directly or through co-investment club deals, but what is absolutely essential, for any investor that is considering investing globally, is the necessity of access to local expertise before even trying to negotiate and acquire an asset.

"Such investors have to work with a partner in Europe who can provide access to unbiased legal, tax and other structuring requirements in order to fully understand the implications of ownership and returns they can achieve. Once they understand this, then they can start to look at specific transaction opportunities, because by then they know the implications of investing in a particular market," he said.

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Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate

Mr. Frank Khoo, Global Head of Asia

The AXA Group has been managing real estate portfolios for over 30 years. The different real estate units were consolidated with the strategic decision in 1999 to create AXA Real Estate Investment Managers. This was done so to complete the consolidation of AXA's real estate management capabilities throughout Europe.

At the same time, it was considered that there was a significant opportunity to leverage this infrastructure, in order to become a leading panEuropean real estate investment manager offering services to both external institutional investors as well as existing AXA clients.

Since 2006, AXA Real Estate Investment Managers has expanded its presence in Asia with offices in Tokyo and Singapore. In 2010, AXA Real Estate Investment Managers

became AXA Real Estate and expanded its global footprint with the creation of a capital raising team based in the United States.

As noted by Mr. Frank Khoo, Global Head of Asia, AXA Real Estate, today, the company is the world's second largest real estate fund and asset manager, and the largest in Europe, with €40 billion of assets under management. It has over 120 external institutional clients spread across the world, in addition to managing funds for around 10 AXA insurance companies.

"With 500 real estate people operating in 22 countries, AXA Real Estate's competitive advantage stems from its global fund management expertise combined with extensive on-the-ground deal sourcing, asset management and development execution capabilities," he said.

The company structures and actively manages investment products, seeking wide-ranging opportunities along the risk spectrum to deliver targeted returns commensurate with clients' risk profiles, through a variety of investment strategies.

These range from core to opportunistic, country-specific to geographically diversified, sector-specific to multi-sector, with the capacity to invest at all levels of the capital structure."

"Our core business is real estate fund, asset, and development management. We have extensive local expertise in all of the major property types. In addition, AXA Real Estate offers specialist local expertise in areas such as transaction execution, development, asset and project management, tax, legal, accounting, risk management and compliance."

Mr. Khoo joined the company in 2008 to help the company expand its operation in Asia. Appointed as Global Head of Asia, based in Singapore, he coordinates the development of the company's investment and asset management activities in the region.

He also manages the development of investment platforms in Japan and has set up a local presence in other parts of the region which are important to AXA Real Esate's strategy. He has contributed to the launch of Asian investment funds to develop its asset base in Asia on behalf of its clients.

With over 15 years in the investment industry, he has extensive experience in private equity and real estate and a deep knowledge of all the Asian markets. His expertise in deal sourcing and execution as well as fund launches have contributed widely to the company's ambitions to become a major player in the Pan-Asian real estate investment industry.

In addition, Mr. Khoo has also been appointed as Co-Chairman of the EUCCK Real Estate Committee and will be coordinating its activities, seeking to give is wider exposure in Singapore and other Asian markets.

Speaking on this new role with the chamber, he noted that the Committee has already established itself as one of the premier platforms for Real Estate professionals in the region, having organized highly reputed international conferences and meetings. As Co-Chairman, he hopes to contribute towards expanding its activities and raising its profile even more.

Speaking on the priorities for AXA Real Estate, he noted that global growth remains a key priority and AXA Real Estate is currently expanding its presence in both the US and Asia, most recently with the launch of its US platform last year.

He also noted that the company signed an agreement with The Sumitomo Trust and Banking Co Ltd (STB), one of the largest trust banks in Japan, formalizing plans to jointly set up a new investment fund for Japanese real estate.

"Over the past three years, we have substantially expanded our operations across the Asia region, establishing the new Asian headquarters in Singapore, announcing a memorandum of understanding with China's Ping An Trust to co-invest in developing residential projects in China and also the deal with STB."

These developments were the next step in AXA Real Estate's plans to offer a diversified range of Asian real estate opportunities to institutional investors, in complement to the firms established European capabilities, he said.

"We already had an existing team on ground in Japan, but we chose to tie up with Sumitomo as we feel that this tie up will greatly enhance our execution ability in Tokyo both from the aspect of deal sourcing and asset management."

There is no doubt that investors are now recognising that the pace of growth in the Asian property market is likely to outpace that of both the US and Europe. As such, they are increasingly prepared to consider exposure to the region when building up a balanced global strategy, he added.

He said that in general there was a 'three-tier' approach emerging in terms of investors' attitude. One for countries like Japan, which as the most mature Asian market, offers investors core investment characteristics especially on good quality commercial assets. The next for 'semi-developed' markets like Korea, Singapore and Hong Kong, while the last for the emerging Asian markets like China and India.

The emerging markets are more opportunistic and therefore are more suited to those investors who are prepared to accept a slightly higher risk profile.

"Asia is becoming a strategic destination for the real-estate investor and we want to support our group and third party client efforts in diversification and creation of value," he said.

In a separate interview, Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate, who was in Seoul to meet with potential investor partners noted that while Korea is an important market for the company, it is not an immediate priority.

" We want to expand our investments in Asia, are considering Korea for medium term exposure. Although a very mature market, it is still dominated by domestic players. It is only recently that the foreign investors have started coming it. We look at it as a key investment market in the long term," he said.

When the company invests in a new territory, they consider it very important to have local expertise. While in Europe they have setup their own local teams, in Asia, the strategy is to have both a local team and a local partner. For example the company has teamed up with a local partner in China.

As for the emerging BRICs, he noted that they have a huge potential, and each country has its own advantages, although Russia does not have the characteristics of other emerging markets and is energy driven. The outlook for China, India and Brazil is very positive.

"The only country where we have no strategy is South Africa, as it is a market of its own, and we have to be very cautious."

Mr. Vaquier said the main challenges the company faces in new markets is to understand local characteristics and have a secure environment to do business.

"We need to be careful with volatility of markets, and have to be very careful with the business cycles. Getting a good local partner is important as also investing in real estate asset classes which are backed by growth model." support case

With regard to the European economy which has been hit by the debt crisis in Ireland, Greece and Portugal, he said AXA is "cautiously positive" that the recovery will take place soon.

" The worst is behind us, and many private companies are expanding again. The worries on the debt are not going to disappear overnight, and will take a few years. But it will definitely recover."

While the citizens of many of the countries have been protesting the austerity measures that have been implemented in these countries, he noted that the combination of higher taxes and slower consumption is painful, but there are not much choices left.

"The governments have to take into account all factors. The people are critical not of the measures, but how it is being implemented," he said.

Speaking on the impact of the Japanese tsunami on the company's business, he noted that although it is too early to say, it will likely not have much of an impact. The disaster has shown that earthquake regulations have been effective in limiting the damage. While the economy may be effected in the short term, the reconstruction efforts will help the economy grow again.

Since AXA is involved in life insurance and not in property/causality insurance, there will be no impact on the parent company, he said.

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Mr. Tang Jun, Chairman, YangGuang Co. Ltd.

YangGuang Co., Ltd. is a public company listed on the Shenzhen Stock Exchange since 1996. In 2006, YangGuang signed an investment agreement with Reco Shine Pte Ltd., which is a subsidiary of GIC Real Estate Pte Ltd., and became the first A-share listed real estate company in China with a foreign investor being its major shareholder.

Mr. Tang Jun, Chairman, Yangguang, tells us bout his company plans and the Chinese real estate market.

Could you give us some background about your company?

YangGuang focuses on holding, investing, leasing and managing the operations of commercial real estate, while at the same time being involved with the development and management of high-end apartments, hotels, office buildings, and urban complexes. In order to establish a competitive advantage in the commercial real estate industry, our company strives to integrate commercial resources to create a model that covers investment, planning, development, and the business operations of the entire process. The company is committed to maximizing returns for investors, providing the best benefits for its tenants, and creating enjoyable shopping experience for consumers. With more than ten years of professional experience in real estate development operations, the company has set up a business scale that focuses on development around the Bohai Sea region, while at the same time emphasizing nationwide development and expansion. As of December 2010, the company owned and managed a total of 26 large-scale commercial real estate projects, covering a total floor area exceeding 1.5 million square meters. Taking into account all these accomplishments and plans, YangGuang is steadily marching towards the ultimate goal of "becoming China's leading commercial real estate group". Transformed from a residential housing real estate dealer to a commercial real estate dealer, YangGuang is endowed with competitive advantages that are lacking in traditional commercial real estate dealers, for instance, concept of innovative capital operation, whole value-chain operating mode, rich product development and operation, sound partnership resources, and professional real estate development team etc. As far as capital operation is concerned, YangGuang actively explores and develops new financing channel and establishes "finance + real estate" business mode, which provides commercial real estate operation with abundant fund guarantee. The company has already established long-term successful project cooperation with GIC RE, and will still expand the scale and scope for future cooperation. At the same time, the company has also established commercial real estate funds and is actively developing financing channel. With regard to business operation, YangGuang exerts itself to build the entire value-chain operating modes, covering investment, planning, development, leasing and operation. Through the entire value-chain system management and effective key aspect control and organic inter value-chain synergy, the company has formed core competitiveness. Meanwhile, YangGuang selects retail commercial real estate as its main business orientation, for among numerous commercial real estate classifications, retail commercial real estate has relatively convenient for redevelopment and improvement. If also supported by appropriate operation management, its long-term return will be quite considerable. After many years of development, YangGuang has accumulated rich product development experience; the three product brands, namely, the "Life Square" (阳光新生活广场), the "Shine City" (新业广场), and the "YangGuang Center" (阳光新业中心), which have been created through standardization process, cover the main types of commercial projects, and will be improved and upgraded continually in the process of product replication. The current successful commercial real estate development case in places, such as Beijing, Tianjin, Qingdao, Chengdu, and Shenyang etc., enabled the enterprise to have accumulated mature product development experiences.

Moreover, YangGuang has established strategic cooperative partnership with numerous international and domestic well-known brands, such as Carrefour, Wal-Mart Stores, Watsons, Ito Yokado, Gome, and Suning etc., and the stable and quality customer resources have ensured completion of investment promotion of commercial real estate projects in advance, endowing the company therefore with a complete operation system.Like all successful enterprises, YangGuang has a powerful team of commercial real estate management. At present, YangGuang owns a management team with several hundred members, and it will continue to grow along with increase of the number of commercial projects. Relying on its own professional team of commercial real estate management, YangGuang itself controls all aspects from development and investment promotion to later stage operation management. This is also the whole value-chain representation and preparation for output of future commercial real estate management operation.

Which are the best places to invest in China? Does the biggest potential lie in second – and third-tier cities rather than in first-tier cities?

As far as commercial real estate is concerned, the best region for investment in China is still concentrated on cities, and whether in the first tier cities or the second and third tier cities, they all have opportunities. As early as in 2007, YangGuang developed a Bohai rim region strategy, while at the same time paying close attention to the balanced development in the national market. After carrying out an in-depth assessment in key areas, and taking expansion from one single project to more opportunities which cover the entire area as our layout strategy, we have currently mapped out and identified 10 cities covering the four major areas of China, and developed complete strategies for steadily expanding our projects. The layout cities include: Beijing, Tianjin, Qingdao, Shenyang, Chengdu, Xi'an, Zhengzhou, Yantai, Shijiazhuang, and Tangshan. In the future, in regions such as the Bohai rim region, North China, Central China, Northwest China, and Southwest China etc. where branch companies have already been set up with also project establishment, we will further strengthen and consolidate our basis. With respect to the Yangtze River Delta, Zhujiang River Delta, the Southwest Region and the Northeast Region of China, we will also actively search for quality resources conforming to our corporate strategy, and wait for opportunity for expansion. With respect to potentials, though the second and the third tier cities have indeed enormous opportunities for development, the first tier cities have also great space and opportunity for development. Even though the first tier cities have relatively less opportunities and a relatively higher threshold, with growth of population, they will certainly form many "emerging urban districts", and these urban sub-centers are precisely where the potentials of the first tier cities lie, such as one of our commercial projects in Tongzhou District, Beijing (Tongzhou Life Square). In 2006 when we purchased this project, though it had advantageous geographical location and consumption potentials at that time, as a commercial real property, it had problems in architectural structure, retail format planning, brands level etc., which made it unfavorable for business operation. After purchase, the company re-planned its retail format, making it more reasonable. With these improvements, performance of this project has realized steady growth, and the sales volume of the anchor tenants and secondary anchor tenants also achieved steady increase. Within just a short period of three years after redevelopment, the rental income for the two years, namely 2008 and 2009, increased by 43% and 11% respectively on a year-on-year basis, and with impact of the 2009 financial crisis, it still achieved a steady growth. While making its layout in the suburbs of the first tier cities and in the second and the third tier cities, YangGuang hasn't given up its steps of overall arrangement in the first tier city urban core areas. At present, the company has already been entrusted with the management of certain large-scale business project located in the Beijing core CBD area (Beijing International Center). At the same time, in the core area of Tianjin, a landmark "Tianjin YangGuang Center" is also in planning. As China's real estate market is a typical "policy market", one should pay attention to policy orientation. It is clear from the 12th five-year plan that, in the next 4-5 years, the second and the third tier cities will be the focus of national development. Adapting to the general background of the times, YangGuang had already started to gradually make overall arrangement in the second and the third tier cities as early as several years ago. With mega cities as support, small and medium cities as focus, the company has been vigorously developing the second and the third tier cities, helping to build some urban commercial centers with sustainable operation ability, building commercial ecological circle, and bringing harmonious local economic and social development. For instance, not long ago, YangGuang had reached an intent of cooperation with Beiguan Village of Xi'an city concerning reconstruction of the old marketplace of the urban village, and the project will be reconstructed into a local large-scale commercial complex.

What are the best market entry strategies as a foreign investor, developer, and retailer?

At the early period of their market access, overseas investors, developers and retailers may consider finding a domestic cooperative partner in China and, through cooperation with local enterprise, steadily develop their business. With respect to the mode of operation, investors and developers may consider participating in cooperation with domestic enterprises by means of project cooperation or capital injection. For instance, the cooperation between YangGuang and GIC RE, in 2006, YangGuang entered into a strategic investment agreement with Reco Shine Company, a subsidiary of GIC RE, becoming the first domestic A-share market listed real estate company that has introduced international strategic investment into China. In 2007, after completion of private offering of additional shares, we conducted large-scale, extensive and in-depth cooperation with GIC RE. For instance, in 2008, we together completed large-scale overall acquisition towards 18 projects of the Home World (家世界), and both parties jointly held commercial property assets, which became a typical case of cooperation between overseas investors and domestic developers in the commercial real estate market. For access to the China market, overseas retailers may borrow lessons from the cooperation between YangGuang and Ito Yokado. YangGuang implements order-type of thought for commercial real estate development. In its very beginning of cooperation with Ito Yokado, YangGuang first defined its intention of shop setup and location requirements, and carefully examined and recommended appropriate projects. In its very beginning of design, construction and investment promotion, YangGuang "customized" the projects in strict accordance with the advanced Japanese concepts of shopping center and the spatial layout, architectural structure, public support, fire fighting arrangement, as well as traffic and people flow of commercial complex per requirements of Ito Yokado, and realized the maximum and perfect harmony and unity between the shopping environment and customers, and between customers and the architectural structure, thereby ensuring operation of the moved-in tenant in accord with their wishes and convenience and comfortable shopping of consumers. This kind of mode of commercial customization of YangGuang can ensure quick opening by overseas retailers of the China market and, at the same time, retain the local features and characteristics of overseas enterprises, it is therefore highly welcomed by various leading domestic and overseas retail enterprises and brands. At present, YangGuang has already established long-term strategic cooperative partnership with a number of large-scale domestic and overseas retailers, such as Ito Yokado, Carrefour, Vanguard, The Home Depot, and Wal-Mart Stores etc.

What are the major challenges as a foreign investor? How do you manage risk?

In recent years, with continuous deepening of the opening-up of China's business market, foreign capital business enterprises have landed in China one after another, and while bringing bout opportunities, the China's market is also hidden with enormous challenges. Failure to adapt to the local circumstances and conditions is a major trouble for foreign capital. First of all, from the policy environment point of view, although a series of new policy measures to promote mutual investment have already been launched in recent years, for instance, the gradual lessening of restrictions on the percentage of shares of foreign investment and allowing domestic market listing of foreign enterprises etc., China nevertheless still has certain restriction policies on foreign investment and acquisition etc., and relative to local enterprises, foreign investors have certain threshold to cross. At the same time, many relevant policies and evaluation systems in China are somehow different from that of foreign countries. Moreover, with respect to market space, industrial support, and labor quality of China etc., there are still certain differences from that of foreign countries, and many overseas business models are not applicable to China at all. With respect to control of risks, overseas investors may search for reliable partners to gradually adapt to the rule of the game of the China market. For instance, GIC, the strategic investor of YangGuang and also one of the world largest fund management companies in the world, manages over USD 100 billion assets in the world, and its steady and robust investment style makes it select global-wide partners with deliberation, and at present, YangGuang is its only strategic cooperative partner in the field of retail real estate in China. As far as YangGuang is concerned, GIC is its financial investor on the one hand, and on the other hand, it also brings about the most advanced international project management and operation experience for YangGuang, and dissolved many worries in project development and operation. This multi-dimensional mode of cooperation can reduce risks of overseas investors and obtain stable investment return and, at the same time, enable fast development of local enterprises. From another point of view, as a local developer with certain basis, in the "policy market" environment of China, YangGuang is endowed with unparalleled advantages of foreign enterprises. We can, with sound government relations, maintain and get quality project resources; through control of project startup and completion schedule, ensure the time of project opening; through scientific mode of retail format planning and the accumulated investment promotion resources, ensure overall project business benefits; and through strengthening business operation ability and extent of promotion, ensure enhancement of business project operation and increase of rental income; and through whole value-chain control of the whole commercial real estate industry, minimize its own and investor's return risks. Moreover, as far as overseas investors are concerned, if they are not interested in direct enterprise investment or worried about the withdrawing system, they may consider searching for inland powerful cooperative partners to access the domestic commercial real estate market by way of commercial real estate funds or commercial real estate trust through help in financing. For instance, YangGuang has also set up its own fund company, and it has had already some attempt in this type of business operation. The fund company is now in sound operation, and in the future it will be the focus of our business development.

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Ms. Sandra A. Urie, Chairman & CEO, Cambridge Associates

Cambridge Associates is a privately held independent consulting firm that provides investment consulting and oversight services to more than 900 clients worldwide. The company strives to help global institutional investors and private clients meet or exceed their investment objectives by offering proactive, unbiased advice grounded in intensive and independent research.

In this interview, Ms. Sandra A. Urie, Cambridge Associates' Chairman and Chief Executive Officer tells us more.

Could you give us a brief background about your organization?

Cambridge Associates was formed in 1973. The concept for our firm grew out of work done for Harvard University by our two founders, James Bailey and Hunter Lewis, who are still involved in overseeing the firm today.

Over our nearly forty years in business C|A has expanded into a global investment consultancy. Our mission has remained constant: we strive to help institutions and private investors around the world meet or exceed their investment objectives by providing proactive, unbiased advice grounded in intensive and independent research.

Cambridge Associates currently has over 1,000 employees based in London, Singapore, Sydney, Arlington, Boston, Dallas, and Menlo Park, with an office to be opened in Beijing in the summer of 2011. Our professionals are dedicated to serving over 900 clients globally including colleges and universities, charitable foundations, medical institutions, museums, Sovereign Wealth Funds and other government agencies, pension funds and families. Our clients represent aggregate assets of more than US$2.5 trillion.

Our only line of business is investment consulting and its supporting functions (i.e., research and performance measurement). One-hundred percent of our revenues are derived from providing these services to our clients, the owners of the assets we advise.

Investment Consulting: Consulting is our core business, and we advise clients on a broad range of investment issues such as portfolio strategy and policy, asset allocation, manager selection, and performance evaluation across all asset classes, including alternatives (hedge funds, private equity and private hard assets). In addition, currency hedging has been a key issue in many countries where we have clients, including Korea. We also have significant experience in providing advice on investment operations, corporate governance, risk management, and best practices in institutional investing. These are all topics that should be of interest to Korean institutional investors as they contribute to superior investment returns.

• Research: Our high-quality, independent investment and capital markets research provides the foundation for all client recommendations. We currently have more than 190 research professionals working across four continents, bringing a global perspective to our work. Our research efforts are supported by our proprietary manager database, which currently tracks over 7,000 managers and 22,200 funds across all asset classes and geographical regions. This means our clients have access to a large and global opportunity set when considering implementation strategies for their portfolios.

• Performance Measurement and Reporting: As part of the consulting relationship with our clients, we undertake performance monitoring for both marketable (e.g. public equities, fixed income, hedge funds) and private investments (e.g. private equity, real estate, venture capital, infrastructure, energy, timber). Our reports include investment returns and regular analyses of fund performance. These reports help our clients analyze their performance results, how the results were achieved, and how they compare to customized benchmark statistics.

What is your view on the current investment strategies of Korean pension funds? Should they allocate more resources to Alternatives?

Korean institutions are certainly considering expanding their policy portfolios to include more exposure to alternatives and we would certainly support that move. Depending on the alternative classes included, they can provide the potential for higher returns and also, in the case of edge funds, lower volatility. However, implementation is critical, and requires a rigorous approach to due diligence and manager selection. Few institutions, including some in Korea, have the requisite in-house experience to effectively identify, complete the due diligence on, and gain access to the best alternative asset managers on a global basis. As a result, many investors have had less than positive experiences with hedge funds during the financial crisis and find themselves under-allocated relative to their original plans.

Fear of a potential Madoff repeat looms large and reinforces the need for disciplined and comprehensive due diligence, both before making an investment and on an ongoing basis once the investment is made. The Korean investment community was hit hard by exposure to Madoff. This has caused many investors to step back and examine their investment decision-making process. For many, around the world and not just in Korea, it was a fiduciary wake up call. One of the key oles we play at Cambridge Associates is to protect investors from mistakes by working alongside internal investment professionals to provide rigorous due diligence and a global perspective on manager selection. If Korean pensions want to build out their allocation to hedge funds, they must be prepared to invest in the process of researching, selecting, and monitoring managers.

This issue is also relevant to private investments (i.e., private equity, venture capital, real estate, energy, infrastructure, and timber). Given the significant dispersion of returns among managers and their funds, manager selection and rigorous due diligence are critical. Building a private investment portfolio can significantly enhance returns, but also requires a commitment to building the resources necessary to implement and monitor managers and the patience to build out the program over time to minimize so-called vintage year risk. Based on our observations, many Korean institutional investors are looking at a narrow subset of the universe of available private investment opportunities globally, which will likely limit their ability to generate good risk-adjusted returns.

We have also seen a tendency in Korea to focus on capital preservation in nominal terms. Protecting a portfolio against nominal losses can hide the effect of ongoing inflation and can expose the portfolio to inflation-adjusted capital losses. Such an approach requires an even more vigilant focus on due diligence and manager (or asset) selection. When perceived risk is low (i.e. because of a government guarantee) nominal returns are also generally lower. We like to think in terms of risk-adjusted returns: how much incremental upside could investors receive from an additional unit of risk, and where do asymmetries exist that investors can benefit from?

What are the real estate investment intentions of global investors?

At a very basic level, many people like investing in real estate because it is a "real" asset – something you can see and touch – it typically generates both an income return and a capital return. For people who are skeptical about securitized and less tangible assets, physical real estate can bring a sense of comfort to investors. We see this particularly in Asia. Real estate can also offer investors some inflation protection through exposure to the potential for rising rents and capital appreciation when financial assets are being hurt by inflation. Public and private real estate investments can also provide valuable diversification as well as equity-like returns over the long term. Private real estate offers greater prospects for active managers to exploit opportunities and add value. On the other hand, private real estate is illiquid and more expensive. Public portfolios provide the most immediate source of diversification, whereas private real estate requires time to build. REITs generate cash flow, are liquid, and have lower fees. However, they are subject to the supply, demand, and pricing pressures of the public equity markets. The correlation of REITs to the broad equity markets would likely increase during periods of stress within the market and historically, REITs have been highly correlated to small cap value stocks.

We advise global investors to invest in real estate through a diversified set of public and private fund opportunities and to consider relative value at the time of implementation. The other interesting trend is global investors' portfolio mix of investments in limited partnership vehicles and direct investments in properties. Large institutional investors have typically first built a portfolio of limited partnership investments, allowing them to build relationships with the fund managers over time. This can then provide a foundation for co-investments alongside these managers, as well as eventually for a portfolio of direct investments, where a sufficient in-house resource with appropriate direct investing experience exists. In the context of a large, diversified portfolio, such direct investments may be appropriate. However, smaller institutional investors might be taking unnecessary risk with direct property investments, sized too large relative to the size of their asset pool. More often, these types of institutions build exposure to real estate through limited partnership vehicles, more appropriate to their size and diversification needs. The risk in Korea is that smaller institutions, in particular those without appropriate in-house investment resources, seek to emulate the leading investors when they do not have the internal resources to implement and replicate those strategies.

Are Asia and Korea an important part of their strategy?

Yes, Asia, including Korea, is definitely considered in the opportunity set in a global portfolio. Many of our North American clients travel regularly to the region and a few have opened up offices in Asia for the very purpose of analyzing Asian investment opportunities. They are gradually increasing their exposure to alternative assets in Asia, while paying close attention to relative value at a time when a great deal of capital is flowing into emerging markets. Investors should be careful to diversify by vintage year, strategy, geographic location, property type, and manager.

What asset classes and markets are favored by global investors?

Right now it is challenging for global investors, as we are not seeing many obvious, attractive opportunities from a valuations perspective. That means we are encouraging our clients to be defensively positioned.

What does that mean?

Within equities, overweight high-quality or mega-cap growth stocks and long/short equity hedge funds. Both strategies may under-perform in a rising market, but they should prove more defensive when market corrections occur. We are also encouraging allocations to managers with flexible mandates who can respond quickly to opportunities that arise in a rapidly shifting landscape. Of course, greater selectivity and ongoing oversight is required when hiring managers with more flexible mandates. These managers should have a depth of experience in the markets they participate in and a proven record of adding value through tactical moves. We continue to be cautious on most Western developed market sovereign bonds in light of weak fundamentals and expensive valuations. Both of these factors suggest that an allocation to sovereign bonds should not be expected to provide as much defense as it has historically, and that it should be supplemented by cash when yields are very low.

In terms of markets, we are recommending that our clients stay neutral on developed market equities. Equity valuations in developed markets are generally not excessive, although U.S. equities are currently overvalued. In emerging markets, while valuations are still somewhat stretched, maintaining exposure and building a strategic overweight are important from our perspective. For those with relatively large allocations to emerging markets, we would consider a more diversified exposure utilizing a multi-asset class approach, incorporating equity, local currency debt, hedge funds, and private investments if appropriate.

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Mr. Robert McKellar, CEO- Asia Pacific, Savills Asia Pacific Ltd.

The Savills Group, established in 1855, advises on all matters of commercial, residential and leisure properties. It provides a comprehensive range of advisory and professional property services to developers, owners, tenants and investors alike. These include consultancy services, facilities management, space planning, corporate real estate services, property management, leasing, valuation and sales in all key segments of commercial, residential, industrial, retail, investment and hotel property. The company which is listed on the London Stock Exchange, has an international network of more than 200 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. In Asia Pacific, it has over 44 regional offices comprising 20,000 staff. This regional market includes Australia, China, Hong Kong, Japan, Korea, Macau, Taiwan, Thailand, Singapore, Vietnam, with associate offices in Malaysia, Indonesia and New Zealand. As noted by Mr. Robert McKellar, Chief Executive Officer- Asia Pacific, Savills Asia Pacific Ltd., the company offers a unique combination of sector knowledge and entrepreneurial flair, giving clients access to real estate expertise of the highest caliber. "We choose to focus on a defined set of clients, offering a premium service to organizations and individuals with whom we share a common goal. Last year our revenue was approximately $500 million. We sold $9.2 billion worth of real estate in 2011, guided over 21000 valuations for $320 billion, managed over 111 million sq. m. of real estate property and leased over 2.4 million sq. m. for commercial, industrial and retail," he noted Savills is synonymous with a high quality service offering and a premium brand, taking a long term view of real estate and investing in strategic relationships, he said. Mr. McKellar was appointed CEO, in March 2005 and is responsible for overseeing Savills' regional operations across the Asia Pacific region. He relocated to Seoul in July 2009 to be able to focus more on North East Asia, while continuing to oversee the company's operations across the region. At the same time, Savills increased its management team in the region, and delegated responsibilities for businesses in China and South East Asia to several core individuals reporting to him. Mr. McKellar joined the group in December 1988 as Financial Controller and then Managing and Financial Director for Savills Commercial Ltd., before being appointed Finance Director for Savills Plc in July 2000. Prior to working for Savills he worked for BP Minerals Ltd. and Babcock Power in London, and British Steel Corporation in Scotland. "There are several reasons why I chose to relocate to Seoul, as Asia Pacific CEO. Logistically, it is easier to travel to Shanghai, Beijing, Tokyo and Singapore. Our focus is North East Asia and it made sense to be based in part of the region. I see no reason why regional CEOs should be based in Singapore and Hong Kong all the time. Moreover, I travel all the time anyway, so I could be anywhere," he said. He also noted that Korea is the third largest economy in Asia and is still a very big and attractive real estate market. "I think it is good for any CEO in Asia Pacific to spend time in Seoul. Because, then you begin to understand the market here and it is a good experience. Spending time in a market like Korea should be an opportunity anyone would welcome. We know it is much more difficult here than Hong Kong and Singapore. We all know it, but that adds to the value. Other reason is that Korean are big investors overseas, so why not spend time here and talk to the institutional investors." This, despite the fact that Korea is not the biggest market for Savills. Looking at its split in terms of profile, the company is very heavily geared towards Hong Kong, China, Macau and Taiwan which account for 75 percent of its business in Asia Pacific. Other big markets are Singapore and Australia. "Korea and Japan are smaller. They are more mature, and more difficult to do business in. The emerging markets like China and Vietnam are easier for us to get a position there. More mature markets like Korea and Japan are difficult because of historical barriers to entry. Having said that, I must add that the opportunities in Korea are tempting." In Korea, Savills has around 140 staff doing property management, investment sales, leasing, valuation, project management and closed asset property management. "Performance in 2011 was OK, it wasn't great. We were profitable last year, the same as 2010 and the global economic slump did not really affect us because property management, asset management are consistent businesses. As regards investment sales, we roughly did two last year and two the year before. Leasing was quite good, but generally speaking it was OK...much the same as 2010." "This year the company has got a few deals, a few investment transactions it is working on, and hope to transact soon. In fact last year would have been much better, if they had managed to complete one or two deals that slipped into 2012." "We also reduced our costs. This year will be better, although not as good as Hong Kong or Singapore, but certainly better than 2011." Speaking on the advantages that Savills enjoys vis-a-vis local competitors, he noted that being international players they can bring in international clients into the market and also can take the Korean clients overseas. Many Korean institutional investors are investing in London, since it is a very attractive capital market for overseas investors, and Savills can offer the ability to acquire real estate in Europe and other overseas markets. One of its strengths is internationalization, compared to local competitors. "We have some systems and applications and procedures which are international that help us to manage real estate in places like Korea and offer overseas sales that local players cannot offer." For that matter, Savills is one of the advisors to the biggest institutional players in Korea, the National Pension Service, which has over $300 billion in assets. NPS aims to boost overseas investments to about 20 percent of its assets by 2016, up from 12.9 percent. "We are lucky to be able to advise some of the large institutions in Korea. Increasingly, we are seeing that capital flows are going from east to west...not just the Koreans, but the Chinese and Singaporeans too. This will continue to happen. Especially in big cities like London." As regards the opportunities for investment arising from the eurozone sovereign debt crisis, McKellar noted that a lot of assets are going cheap. "However, most of the overseas investors tend to want to go to London as the prime focus since it is a liquid market, and a very big institutional market. Other markets in Europe tend to be less attractive. Even the other European investors are buying real estate in London because of the problems they perceive in the eurozone. There will be opportunities in eurozone if you are brave." "While places like France and Germany continue to be attractive, most investors are focusing on London and the Scandinavian countries where there is less volatility. Europe will come back. The great thing about real estate is that it goes in cycles. The key is buying it near the bottom of the cycle. It's all about timing," he said. He picked as for the potential markets that will do well this year, besides London, "Australia is another market which has tremendous opportunity. It is a very transparent market, and the economy is strong with net immigration. In terms of risk, Indonesia may be stable, but real estate investments in Jakarta will give very good returns. Hong Kong and Singapore on the other hand continue to be volatile." "I would consider Korea to deliver high returns, as long as you can access the product. Unfortunately, the real estate market is tightly held by the conglomerates. Many German funds want to come here, but are unable to proceed further." In terms of product mix, he noted that despite global economic conditions, Asia Pacific's retail sector will continue to grow off the back of continued consumer demand. "The retail fundamentals remain solid in the region, with sustained consumer spending in Hong Kong, Shanghai and Beijing. China has been the most significant growth driver for 2011 which has consequently led to higher retail rents in Chinese cities." He also noted that the Asian market has become a prime target and pertinent region for retailers resulting in an increase in investment sales and retail constructions. This will continue, especially as new opportunities arise in countries like Vietnam and India. Referring to the challenges that a company like Savills faces in the Asia Pacific region, Mr. McKellar said that being a listed company, there are many compliance constraints which the local competitors, especially in China take advantage of. "The Asian way of doing business strongly relies on relationships, whereas the western model is different. Having to adjust to this is quite a challenge. Moreover, regulations in Asia tend to change very quickly and are unpredictable." "We however still consider the region to be an exciting place to do business. We are expanding this year, to move into Malaysia, Indonesia and New Zealand. We are also keen on India, especially the retail sector."

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Mr. Jack Foster, Head of Global Real Assets,

Franklin Templeton Real Asset Advisors

Franklin Templeton Real Asset Advisors has been investing in global real estate since 1984, and counts among its clients leading institutions from around the world. It strives to provide investors with an efficient alternative for investing in international property through diversified portfolios.

Franklin Templeton Real Asset Advisors is a unit of San Mateo, CA-based Franklin Resources, Inc., a global investment management organization operating as Franklin Templeton Investments, which has over $734 billion in assets under management. It has offices in over 30 countries around the world and offers investment solutions in more than 150.

As noted by Mr. Jack Foster, Head of Global Real Assets, Franklin Templeton Real Asset Advisors, as investors in both private as well as public markets, the company draws on a comprehensive perspective of global capital flows, investor behavior, and sector trends across markets and regions.

Mr. Foster joined the company in 1987, and for close to 25 years has been a global investor in private real estate funds and public real estate companies. He has been investing in the Americas, Europe and Asia during these years, and has overseen the development of Franklin Templeton's global real estate investment program and the growth of a team of dedicated international real estate investment professionals.

"Real estate is a local asset class. There are very local issues and it's the primary reason why there will always be inefficiencies in terms of real estate pricing. We aim to exploit those inefficiencies in both our private and REIT strategies."

Real estate is the most local of all asset classes, driven by economic and political happenings in a city, country, or region. All of the macroeconomic and microeconomic factors of the local and regional marketplace are extremely important. Rule of law in a particular country is also critical in terms of our long-term approach. The situation is vastly different in every country and city. That's what makes real estate such a wonderful asset class as a portfolio diversifier, he said.

"Each of the world's three major investment regions—the Americas, Europe, and Asia—is covered by professionals with experience in the local market, providing cultural perspective and specialized asset class knowledge. Our worldwide presence provides the private real estate, private infrastructure and real resources, and listed real estate securities investment teams with local support in several areas including legal, tax, compliance, accounting and client service," he said.

"Being local as well as global is our most important competitive advantage and we have developed this expertise over the 25 years that we have been selecting real estate investments."

Speaking on the advantages of his company vis-a-vis competitors, he noted that there are 25 people who speak 9 different languages from 16 different countries. So it is not only a very global team but also a very local team. The company is very culturally diverse, which is the best way to truly understand and exploit real estate market opportunities around the world.

"With real estate being a local asset class, we take the time to conduct our global research locally, but, more importantly, we believe we have the ability to understand each local real estate market on a deeper level as we have been in most global markets for over two decades. This experience is unparalleled. Over the years we have developed a philosophy that is founded in real estate fundamental analysis. In selecting managers for our clients, while local experience is important, a clear demonstration, by the manager, of market knowledge and transaction history is critical for selecting best local managers."

"The main challenges that real estate companies are facing today is the impact of global financial crisis, and here Asia looks much more attractive. In the next 18 months we can see significant capital moving into Asia. While at present each of these regions account for a third of the company market share, Asia is going to increase in near term. The most scope is of course in China, which is a very important market. We also like Japan which offers different opportunities. They key is stability in rule of law and politics. Australia is safe market but a little expensive. In general we like urban environments including Hong Kong and Singapore," he said.

As for Asia, Mr. Foster said, although it is very important, access is quite difficult. Seoul, Australia and Hong Kong are very efficient property markets, but there is a great deal of domestic capital chasing deals, so it is difficult for foreign capital to get access. It is therefore very important to have a strong relationship with local market leaders.

"The biggest challenge in Asia is that there are only a handful of good managers in the market. Real estate is an illiquid asset class so while asset quality is key, just as important is the particular asset strategy for each investment. Only intelligent managers are able to provide the vision to minimize the downside risk. We believe that significant capital flow into Asia over the next few years, but there are still few managers that we believe will be successful in adding value."

"Of the investments we make, historically, 50 percent are emerging managers. So our biggest challenge is working with these new Asian opportunities, to guide and mentor them into institutional quality platforms. That's where we spend the most time."

On the other hand, in Asia as the power and growth of pension funds is increasing there is a greater awareness of the opportunities that are available globally. Korean pension funds are interested in establishing a beach head for core portfolio. For certain investors this has been achieved and soon Korean investors will seek to vary their investment approach. Due to the broad reduction in real estate allocations, we are seeing an explosion of co-investment opportunities globally. Deal flow for 2011 alone is greater than 2004-2008. This means that Korean investors can have access to the best real estate managers around the world without investing in blind pools. This is a great opportunity for the growing Korean pension market place.

In light of Korean investors' heightened interest in co-investments, the most important thing is to find the best manager rather than the best deals. By this we mean that a great real estate asset that is poorly managed or that has a weak strategic plan can suffer significant loss vs a lower profile building with a strong manager. Investors should focus on the manager experience and the alignment of interest that the manager demonstrates.

"Our relationships with clients are predominately separate accounts. This means that the clients have a customized relationship with Franklin. Combining the bespoke client relations with our long experience with local and emerging managers we have always provided a high level of service. Now that we see this co-investment opportunity, our larger clients have asked us to focus on this strategy. We think that investors will focus on co-investment for the near term as it represents a very efficient way to deploy capital. Given our long history in working closely with the best local managers, we can provide that exposure. Large pension funds are seeing the benefits of diversification and access that multi-manager strategy can offer. This trend will continue as long as the recent co-investment trends last."

"We are hoping to help Korean investors. We will emphasize our commitment and patience in growing business relationships in Korea, e.g. we plan to share our teams experience regularly with Korean investors. This is how our best relationships have been formed."

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Mr. Christopher Merrill, Co-founder, President & CEO,

Harrison Street Real Estate Capital

Harrison Street Real Estate Capital is a real estate private equity firm that was founded in 2005. The firm has over $3.5 billion in assets under management and is widely known as the largest real estate manager offering private real estate funds targeting the areas of Education, Healthcare and Storage real estate in the United States.

Harrison Street Real Estate Capital, LLC was founded at the end of 2005 by seasoned real estate veteran, Christopher Merrill, in partnership with Chris and Mike Galvin (of the founding family of Motorola). The firm takes its name from the place in which Motorola began life. Motorola began as the Galvin Manufacturing Company located on "Harrison Street" in Chicago.

Harrison Street's private equity funds focus exclusively on investing in the need-based real estate sectors in the U.S. around three themes: Education, Healthcare and Storage. These asset classes which includes student housing, senior housing, self storage, and medical office buildings, offer investors attractive risk / return fundamentals given strong demographic drivers and above average return profiles.

"When we started this business in 2005 we decided to invest in asset classes that were not directly correlated to potential swings in the U.S. Economy. We wanted assets classes that offered investors the ability to participate in the need-based categories of US real estate that we felt would hold up better in a down or up economy", said Mr. Christopher Merrill, Co-founder, President & CEO.

That strategy has paid off. There is now an increasing interest in these segments given how well they have performed during a very tough economic environment.

"The bottom line is that the demographic story in our segments — i.e. people living longer, more people being educated and reduced supply — is going to create fantastic investment opportunities over the next 15 to 20 years."

Harrison Street has over $3.5 billion in assets under management through private equity funds, both opportunistic and core strategies, and public securities products. The firm recently launched Harrison Street Core Property Fund, an open-end core real estate fund. It is the industry's first such fund dedicated exclusively to investing in stabilized, income-producing properties in the student housing, senior housing, medical office and self storage segments in the United States.

The company is one of the largest investors in these need-based sectors with approximately $3.1 billion in gross real estate assets throughout the U.S. which includes over 19,500 student housing beds, 5,800 senior housing / assisted living units, over 64,000 self storage units, 1.1 million square feet of medical office space and 4,500 wet & dry boat storage units. Additionally, Harrison Street Securities LLC currently manages over $425 million in REIT securities through three, distinct long only product offerings.

Speaking on the uniqueness of Harrison Street's sectors of investment, he noted that it's the need-based nature of the assets and fact that demand is tied to long term demographic fundamentals, not the general economy.

The sectors of investment including student housing, senior housing, medical office and self storage are sizable, totaling more than $1.0 trillion in gross real estate across the United States. These segments have attracted significant institution capital as evidenced by a number of Real Estate Investment Trusts (REITs) that focus exclusively on investing in these asset classes.

There are a total of twelve (12) healthcare REITs focused on senior housing and medical office with a combined market capitalization in excess of $50 billion, four (4) self storage REITS with a combined market capitalization in excess of $30 billion and three (3) student housing REITS with a combined market capitalization in excess of $5 billion. While the REITs are sizable by measure of market capitalization, the segments remain very fragment with less than 10% institutional ownership in each asset classes.

Education: The off-campus student housing market has seen significant growth in demand from increased enrollment at U.S. public universities coupled with a lack of capital to build new on-campus facilities. These trends are expected to continue as increasing numbers of students attend college and state budgets for higher education will remain focused on education, not constructing new housing. "College enrollments are projected to increase 11% in the next decade as 76 million kids graduate from high school and 70% of those graduates enroll in college creating a supply/demand imbalance for housing" Mr. Merill states.

The ratio of on-campus beds to total enrollment is estimated at 26% nationally, meaning that 74% of students must rely on some type of off-campus student housing. The investment space for student housing is wide as the three public REITs control only 140,000 of the more than 5.4 million off-campus beds. The aging on-campus facilities are out of touch with the demands of today's students who want top-of-the-market amenities. This has led to the development of a purpose-built product. These "communities" offer resort-like amenities with a pool, clubhouse, game room, computer labs, gym, volleyball & basketball courts, etc. and the housing has bed/bath parity offering students greater privacy and security. In 2010, Landmark Properties, a premier developer of student housing and partner with Harrison Street, won the Student Housing Project of the Year award for their property serving the University of Alabama, The Retreat at Lake Tamaha.

Healthcare: Harrison Street invests in two components under the healthcare umbrella, senior housing and medical office buildings. Senior Housing is the general term for institutional residential alternatives available to the adult population older than 65 years of age.

The targeted senior housing population of the 75+ age group is projected to grow from 18 million in 2010 to 23 million in 2020 and 33 million by 2030. Senior housing choices include Senior Apartments (SA); Independent Living ("IL"); Assisted Living ("AL"); Memory/Alzheimer's ("ALZ"); Skilled Nursing Facility ("SNF"); and Continuing Care Retirement Community (CCRC). This is a large and operationally intensive institutional property sector characterized by advantageous demographics, "need-based" consumer demand and highly-fragmented industry ownership. "Harrison Street invests in private pay properties that serve IL, AL and ALZ tenants with a current focus on the "need-based" AL and ALZ segments of senior housing. The firm will not invest in skilled nursing (very regulated and subject to government reimbursement) or Senior Apartments (not need-based)", says Merrill, "and investing in private pay facilities means any Government changes to Medicaid will have little impact on the firm's portfolio".

Medical Office Buildings: These consist of traditional office or purpose-built buildings that are located on or near a hospital campus or a large patient population. MOB tenants include physicians, diagnostic services, imaging, labs and other medical services that benefit from proximity to the hospital. The space typically requires extensive build-out, at the tenant's expense, to accommodate medical use and the location is part of a doctor's "brand", so moves are rare due to patient familiarity with the location and physician investment. As a result, this asset class boasts very high tenant retention rates of 90%+ compared to 75% for traditional office and has produced stable occupancy and rent growth over time compared to the traditional office sector.

"People need healthcare regardless of the economic environment. Further, more insured patients will lead to more doctor visits and combine this with advancements in medical care leading to more outpatient procedures, these are strong performance drivers for the MOB sector," he said.

Key statistics for MOBs are that facilities have seen outpatient surgeries double to more than 17.1 million annual procedures performed in the period from 1997 to 2007, those 65+ average 7 doctor visits annually and 32 million uninsured people are projected to become insured by 2014 via the Affordable Care Act.

Storage: Self Storage is an institutional grade self storage facility that rents storage units on a monthly basis to individuals and business users. The U.S. industry has grown rapidly from 6,600 facilities in 1984 to 50,000 today as the demand for self storage has steadily increased. Today's purpose-built self storage facilities are located in high traffic retail corridors, each built with "curb appeal" to attract the drive-by customer and can accommodate all types of storage uses from personal household goods, to commercial users for business storage, to climate controlled fine wine storage.

"Regardless of economic swings people and companies will continue to need places to store their goods", he noted.

There are several key points making the case for investment in storage properties. Storage is still a largely "mom and pop" business, creating the opportunity to acquire and build institutional quality portfolios. Demand is driven by major life events (renting, moving, marriage, school and divorce) as such 1 in 10 U.S. households rent a self storage unit. Historically storage has strong NOI growth versus traditional categories due to the ability to re-price month-to-month leases in an inflationary environment. Low operating expenses, minimal capital expenditures and a low breakeven rate reduce the overall risk of the self storage investment.

Giving an overview of Alternative Asset Class in Korean market, he observed that the investment opportunity in Korea for senior housing, student housing, medical office and self storage is compelling given the strong demographics yet there is little to no supply with just three self storage properties in Korea and a small number of senior housing properties. When you compare the demographics in the United States with those of Korea, there are many similarities. For example, the senior population (65 years of age and older) in Korea is increasing and this segment of the population is living longer. Additionally, nearly 72% of high school graduates in Korea enroll in college vs. 68% in the United States and similar to the United States, only 25% of college students in Korea are able to be housed on-campus.

"While there is a tremendous long term opportunity to establish these asset classes in Korea, it is crucial to educate the Korean consumer on the benefits student housing, senior housing, medical office and self storage. Creating this product awareness is the key to driving user demand," Mr, Merill said.

He added that Harrison Street has seen a significant level of interest in its investment strategy from institutional investors in Asia.

"I think this is largely due to the fact the Asian investors are very sophisticated and recognize the benefits of investing in education, healthcare and storage real estate in which demand is not tied to the general economy but rather is tied to long term demographic trends. This greatly reduces the overall volatility of the investment when compared to the traditional real estate sectors like office, apartment, retail and industrial."

Harrison Street, Mr. Merill said, is committed to establishing a long term presence in Asia while continuing to education Asian LP's on these asset classes.

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Ms. Anna Ranova Kerr, Tengbom Architects

Tengbom is an architectural firm in Sweden which offers services ranging from urban master planning, healthcare and research facilities, offices, and retail, commercial, residential, and industrial buildings to interior design and layout.

Founded in 1906 and headquartered in Stockholm, Sweden, with additional offices in Gothenburg and Helsingborg, Sweden, Tengbom's business concept is to offer a complete range of highly qualified, creative and cost effective architectural services, up to and including full project management and leadership services by its planning teams.

Tengbom's architects regard the way that a building affects the environment as essential. This approach has made them experts in economic and social sustainable development.

As noted by Ms. Anna Ranova Kerr, Tengbom Architects, the company strives to find sustainable and energy efficient solutions with a positive impact – not only on society of today, but also on that of tomorrow.

In this context she noted that Sweden is well positioned with regard to sustainable urban planning, design and architecture. Stockholm was the first winner of the new European Green Capital award and will be European Green Capital in 2010. One of the key-drivers behind this is the strong Swedish tradition of co-operation between planning authorities, architects and developers.

"We think environmental features of a sustainable community should include: utilization and optimal use of local resources, using less, reuse or recycling, carbon neutral, renewable energy sources, energy efficient buildings, transport and mobility management, avoiding hazardous materials in construction and biodiversity," she said.

With a team of – Architects – Landscape Architects – Urban Planners – Interior Designers Consultants – Tengbom is the third largest architectural firm in Sweden and one of the leading architectural offices in Scandinavia. Tengbom employs over 250 architects and engineers at offices in Stockholm, Gothenburg, Helsingborg, Kalmar, Malmö, Umeå and Uppsala.

"Our firm is one of the oldest in Europe, and has since its foundation in 1906 held its place in textbooks of architectural history as well as being in the forefront in modern times. We pride ourselves in being experts in our diverse fields. Our everyday work continuously fine tunes our professional skills and knowledgebase providing our customers with the knowledge and satisfaction that Tengbom will service all issues and concerns such as complex laws, regulations, and building codes."

Tengbom's competence in sustainable design has been developed over the years in a number of green urban planning and housing projects, ranging from Sweden to China.

Since 1997 Tengbom has been fortunate enough to take part in the planning and design of The Hammarby Sjöstad project in Stockholm. The project is a unique development in Sweden, both in terms of size, sustainable design and integrated planning work. Tengbom has taken part in the masterplan process, design, and implementation of the statutory plans, design guidelines, urban management, sustainability issues, and project co-ordination.

"We also designed the environmental information centre GlashusEtt at Hammarby Sjöstad. Environmental education/energy centres like GlashusEtt, are crucial to the on-going success and efficiency of the embedded technology to the community as a whole."

The building is set in a park with a self-cleansing storm-water canal, surrounded by residential blocks. The building design is transparent in a double sense – from the energy saving double glass facade as well as its environmentally technological and educational content.

"Having been heavily involved in the development of Hammarby Sjöstad for the past ten years has made it possible for us to also work on projects with a focus on sustainable design in other parts of Europe, as well as in Asia and Africa," she said.

Tengbom has recently designed an office building which has been awarded a GreenBuilding certificate, the first one in the Czech Republic. In Tanzania Tengbom is completing the BEX award winning "House of Culture" project, a passively sustainable building and renovation of the National Museum in Dar es Salaam.

"The challenges abroad are quite different, but our experience is that the basic Swedish design approach, our holistic green perspective in combination with a strong local involvement creates a sound mix."

Since Tengbom entered the Asian market four years ago, the company has participated in several projects in early stages with a focus on sustainable design. The growth and urbanization in Asia creates great challenges with regard to balancing growth as well as limiting negative social and environmental effects, she said.

For instance, since Tengbom entered the Chinese market a couple of years ago the company has been invited to take part in several projects focused on sustainable design that are comparable in size with Hammarby Sjöstad. The differences are that these projects are developed three or four times as fast – and that there are numerous projects of similar size under development in all the major cities in China.

At the moment, Tengbom is working on a number of projects not only in China, but also in countries such as India, England, and Tanzania.

"We apply sustainability skills and knowhow from Sweden in our international projects. At Tengbom we believe strongly that the opportunity to work on big and complex projects in various parts of the world make us better prepared to meet future challenges in fast changing and emerging markets."

Ms. Ranova Kerr noted that at Tengbom, concept and aesthetics are important. But the passion is equally strong for the environment, quality assurance and customer relationships. This comprehensive view has made it one of the leading and fastest growing architectural firms in Scandinavia.

"Working within the tradition of Scandinavian architecture, we strive to find smart solutions for building cities that improve the well being of present, as well as future, generations. All our projects, irrespective of size, type and country, have one thing in common – apart from surface, we also contribute with substance. And just like when we first began in 1906, we are recognized for our new way of thinking and our ambition to create added value – socially, culturally and economically."

Many of the buildings that Tengbom has designed over the years have become well known landmarks. In Stockholm, for example – where we started more than a century ago – the townscape is characterized by a number of classic Tengbom buildings, like the Concert Hall, the Högalid church as well as the second Hötorg building and the Bonnier building – two of the most distinguished high rise buildings in the city centre of Stockholm.

"We pride ourselves in being experts in our diverse fields. Our everyday work continuously fine tunes our professional skills and knowledgebase providing our customers with the knowledge and satisfaction that Tengbom will service all issues and concerns such as complex laws, regulations, and building codes," she said.

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Ms. Regina Lee, General Manager,

Shinhan BNP Paribas Asset Management

Shinhan BNP Paribas Asset Management, headquartered in Seoul, is a joint venture between Shinhan Financial Group and the French financial group, BNP Paribas. It is the fruit of an eight-year-old partnership between one of the three largest Korean financial groups and the largest euro-zone bank by assets.

In January 2009, Shinhan BNP Paribas Asset Management was created when Shinhan BNP Paribas Investment Trust Management and SH Asset Management merged. Shinhan BNP Paribas Investment Trust Management was created in 1996 as Shinhan Investment Trust Management and in 2002 the name changed to Shinhan BNP Paribas when BNP Paribas acquired a 50% stake.

As noted by Ms. Regina Lee, General Manager, Real Estate Investment Team, the joint venture is currently ranked third in the Korean asset management market which is crowded with over 60 players, and has 34 trillion won worth of assets under management.

She pointed out that the Shinhan Financial Group Co. Ltd. was incorporated on September 1, 2001, and is Korea's first financial holding company that delivers comprehensive financial solutions through a powerful One-Portal network. Its subsidiaries offer quality financial products and services in commercial banking, corporate banking, credit card, private banking, asset management, investment banking, brokerage and insurance service.

The company has 21 offices in nine countries, including the U.S., the U.K., Japan, China, Germany, India, Hong Kong, Vietnam and Singapore. Currently, Shinhan Financial Group is listed on both the Korea Stock Exchange and the New York Stock Exchange

BNP Paribas is a European leader in global banking and financial services and is one of the 4 strongest banks in the world according to Standard & Poor's. The group is present in over 85 countries, with more than 168,000 employees. The group holds key positions in three major segments: Corporate and Investment Banking, Asset Management & Services and Retail Banking. Present throughout Europe in all of its business lines, the bank's two domestic markets in retail banking are France and Italy. BNP Paribas also has a significant presence in the United States and strong positions in Asia and the emerging markets.

"Both BNP Paribas Group and Shinhan group are trying to create synergies, so we are transferring capabilities between us. The special assets division of this company invests not just in real estate but also infrastructure and is engaged in investment finance," she said.

Regarding real estate assets, she noted that the company owns around 1.005 trillion worth of real estate assets and ranks number 2 in terms of real estate assets alone.

"Our company started the real estate investment business back in 2006. Since 2007 we have recorded an average growth of more than 100 percent. Over the last two years the market has been quite stagnant but we were still able successfully acquire 300 billion worth assets this year and seek to increase asset size by 2 trillion won by 2012, to become the number one in the industry."

The investments made by the company have been in prime grade A office buildings. Being very competitive assets, one can expect high capital gains and steady returns averaging 8 percent, she said.

Speaking on the strengths of the company she noted that the assets under management not just combination of number and figures but these are assets where the life stories of customers are embedded.

"We try to keep that core value in mind whenever we do our business. Many deals are concluded upon cooperation of many market participants as well as many stakeholders. So I think there should be no problem in closing deals if there is cooperation among the various participants. All the parties have different interest in mind but if they all cooperate it will be for the good. Successful deals require good people and good teams, both internal as well as external," she said.

As for the real estate market in Korea she noted that last year was not very good, given the global economic meltdown. However, the market picked up in the second half, driven by Korea's economic performance. This is different from other countries in the world.

One important differentiating trend in Korea is that the real estate market is driven by two segments- asset market and leasing market.

"Asset prices have increased steadily and this is because there are not many qualified tradable assets in the market. This year the decoupling between the leasing market and asset market is likely to continue for the time being."

Negative factors in leasing market such as decline in leasing prices could also continue for the time being. In the mid to long term, this kind of trend is limited. It is not going to continue for long period of time, she said.

Ms. Lee said that the decoupling trend between the two markets is attributable to two factors. First is intensified competition from increase in market participants and second is increase in strategic investors who have relatively smaller expected returns.

Last year 20 players such as asset custodians entered the market this helped intensify the competition in the market. Assets prices were driven by such stiff competition in the process. This could result in formation of assets prices that do not fully reflect the true value of assets.

"As I said earlier the asset prices were also driven by increase in strategic investors, but this type of trend should only be limited to high quality assets. This year the financial market appears to be conservative to real estate market, so this year I think it should be an increase in distressed projects." This is because of decrease in funding sources and deterioration in asset values, delays in projects and increase in capital costs , uncertainties in leasing market (construction may be cancelled etc.) Increased needs to find financial needs for this kind of distressed assets offers good investment opportunities if we can design a good deal structure and find strong deals. Market competition is going to get fiercer but this should only be limited to the primary business of buying and selling assets so there should be some changes in the industry, she said.

Another characteristic trend, she noted is that the real estate market has to businesses-Primary business of buying and selling real estate space and the secondary business of adding value to these spaces. She expects to find new business opportunities in the secondary business.

"So I would like to personally refer to this as a shift from the primary to secondary business in the real estate industry. Until now market participants were engaged in competition in the primary business, but in the future we should increase competitiveness in the secondary business of real estate. We cannot call it as the main trend but it should be," Ms. Lee said.

Until now office buildings took the majority of real estate investment because the infrastructure was in place. Not just investment itself but also the services that manage the investment. If the shift from primary to secondary does occur then the investment which focused on residential and office buildings should now shift to industrial buildings. Value can be generated from services that can arise from these real estate assets, she noted.

Comparing Korean real estate market with other countries in the region she noted that every real estate market depends on the industries that are developed in the country. So if we talk about real estate of certain countries we should look at industries of that region first.

"The Japanese market over the last ten years has seen the bubble bursting and industries suffer from deterioration of competitiveness. The real estate market can only move in tandem with industry of that country. So the Japanese market may have some weaknesses. The demographic terms the country's competitiveness also deteriorated as well. However due to economic strength of Japan there should be steady demand for high quality assets."

She also noted that a lot of investors are interested in Chinese and Indian market and a lot of studies are going on about their growth potential. But when it comes to making investment decisions one should have a look at the infrastructure in these countries.

The Korean market has become open to foreign investment over the past ten years and has sufficient infrastructure for real estate business. The industries are growing in competitiveness, so the Korean market can be a good platform for investors who want to invest in emerging markets. Moreover there is a very low vacancy rate over past ten years and the leasing fee has not changed substantially.

Although last year, many foreign investors disposed a lot of assets for liquidity, this year they will return, she predicted.

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