Although China’s credit tightening on the property sector has provided opportunities for domestic property-based private equity funds such as CURA, it has also created higher capital-raising concerns for the funds.
“Developers used to feast on bank loans and the stock and bond markets. Now, they can no longer get the ‘milk’ as easily as before, so it is time to try the ‘soya milk’ of funds like us,” said Lu Lin of CURA Investment & Management Co Ltd.
China’s measures to curb housing prices include restricting developers from accessing domestic stock and bond markets or loans. Likewise, banks are becoming more cautious about granting loans to developers.
However, the number of domestic property private equity funds is falling, Lu noted. The country has prevented private banking units of domestic commercial banks from selling property investment products administered by private equity funds.
“By doing that, it’s virtually halved the number of our sales channels,” he said, adding that “regulators have reached too far.”
Earlier this year, CURA launched an 800 million yuan property fund with a unit of China Merchants Bank, following two similar funds with the banking arm of the Industrial and Commercial Bank of China. Both products saw heavy demand from private clients.
Its funds target a yearly gross return of 20 percent via equity investment and debt financing for property projects. Since its establishment in 2002, CURA has managed property funds of more than 10 billion yuan, including those of CB Richard Ellis.
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