Morley Fund Management, the largest fund management arm of Aviva, the UK-based insurer, has returned to Singapore three years after leaving. But it is coming with a new brief: instead of selling mutual funds, it is going to enter the real-estate investment space.

The firm will expand its property investments into Asia and look to partner with regional property firms to create greater diversification for its investors.

Morley closed doors in Singapore in 2004. It had been one of a number of firms attracted to the Lion City by the lure of mandates from government institutions, only to fail to grow the business further, either locally or from the rest of Southeast Asia, which was reeling from the Asian financial crisis and the tech bust.

Its exit prompted AvivaÆs Singapore office to outsource $3 billion of assets to third-party fund managers including DBS Asset Management.

ôWeÆve been looking to enter the Asian property market for the past two to three years,ö says Ian Womack, the London-based managing director for property at Morley. ôWe want to work with partners in Asia with a similar long-term view to us and until now, Asia has been a gap in our property portfolio.ö

In its home market and on the European continent, Morley manages 35 property funds. Roughly 80% of its real-estate funds invest into the UK, while the remaining 20% are in continental Europe. In total, it has a total of $59.9 billion invested in real estate, which comprises of 18% of the firmÆs total funds under management of $325 billion.

From the onset, Morley has earmarked $2 billion of equity to invest in Asian property deals that offer attractive risk-adjusted returns and strong investor demand.

It has already set the funds in motion. Late last week, the firm officially announced that 50% of the initial fund had been invested into the Japanese property sector, through the first joint venture of what it hopes will be many. Its partner in the Japanese property market will be Mitsubishi UFJ Trust & Banking (MUTB), which according to Morley, has similar ambitions in the property business.

ôThe joint venture with MUTB took 12 months to put together and we really feel that MUTB can bring the local knowledge element to the partnership,ö says Womack. ôIt was a perfect match for both parties as they are also expanding their real-estate business.ö

Outside of Japan, Morley will also look to forge partnerships with real-estate players in China, India and South Korea. It has already invested under $500 million in these markets and is now seeking the local knowledge in China, India and South Korea to make further investments.

ôWith emerging markets, you need to pick your locations carefully, particularly in markets like China and India,ö says Andrew Peacock, a fund manager at Morley who recently arrived in Singapore.

Peacock and Guy Cawthra, Asia property analyst, will run the Singapore office. Both men have already started their roles there and will soon be joined by a head of Asian property, which Morley is in the process of recruiting.

ôWe felt Singapore was the right choice for our regional hub for a number of reasons,ö says Morley. ôTax issues make it easier to operate in Singapore, as does the strong infrastructure, and its geographical locations puts as in both close proximity to India and North Asia.ö

Morley believes that it will expand its presence to include between seven and 10 staff in the next 12 months and will possibly look to establish a presence in Beijing in the future.
It plans to invest roughly $5 billion in Asia over the next five years and plans to launch Asia-focused funds to European and Asian institutions when partnerships have been established.