Auckland-based fund manager Du Val Group is looking for investors from Hong Kong and Singapore after it launched its first property fund, a NZ$250-million (S$239.6 million) “mid market” fund that will focus exclusively on the New Zealand real estate market.
The fund intends to capitalise on low property prices in the country by acquiring assets worth hundreds of millions of dollars, holding them for six to eight years and then selling them to give back attractive dividends to investors. It targets an internal rate of return of at least 20 percent.
The New Zealand property market has been overlooked by investors in the region, though there are “some good quality assets and good quality managers there”, said Jason Smith, managing director of Du Val Group.
Real estate investment trusts (Reits) listed on the New Zealand Exchange are also trading at discounts of about 30 percent to net asset values, making them attractive targets for acquisitions, said William Nobrega, managing partner of The Conrad Group, the adviser of Du Val Group.
The fund will invest in assets worth NZ$5 million to NZ$50 million, reflecting the company’s belief that mid-market assets provide strong, long-term value, as well as protection from market volatility.
To date, the fund has seen strong interest from investors, said Mr. Nobrega. Since it was launched on August 8, it has received “initial interest” worth US$40 million, he said. First closing of the fund is due in 60 days.
Meanwhile, Du Val Group has another planned private property fund, a NZ$1.1-billion “opportunity” fund that will invest in office and retail investments in Australian and New Zealand cities.