Merrill Lynch has closed its Asian Real Estate Opportunity Fund, raising $2.65 billion from global investors including pension funds, endowments, foundations and high-net-worth individuals. It is MerrillÆs first real estate fund that specialises in the Asian market exclusively.

The fund will be led by Tim Grady, who is head of Merrill Lynch Pacific Rim Global Commercial real estate. He is a well known figure in the property world in Hong Kong and has been at Merrill for two years, having worked on pioneering real estate deals, especially in the opportunistic/value-added segment, during his time in Asia.

Merrill is not able to reveal externally the fees for the new fund, the term, or significant details about proposed acquisitions. The fund will however concentrate primarily on Japan, South Korea, India and China, with a secondary focus on Australia and Southeast Asia.

With some doubts about the immediate prospects for real estate prices in the course of the credit crisis, MerrillÆs reasoning to press ahead with the real estate fund now is that they are mid- to long-term buyers and have a preference towards private markets rather than listed vehicles. Therefore a drop in real estate prices during the fundÆs investment period will make the investment more attractive.