Yishan Capital Partners, a Singapore-based property investor, aims to usher European institutional investors into Southeast Asian real estate in a bid to generate opportunistic returns.
The firm aims to raise $250 million next year mostly from large European institutions to invest in properties in emerging markets including Indonesia, Cambodia and Singapore.
European investors, which are faced with stagnant domestic growth over the next decade, “have lost money everywhere”, says John van Oost, managing partner of Yishan.
While Europeans plan to retain investment assets within the continent and also the US, where the aim is to generate stable returns, Asian market exposures are expected to deliver growth.
“They want to have 20-25% returns on a risk-adjusted basis in emerging markets,” says van Oost. In 2001 he had co-founded IXIS Capital Partners – a European private equity real estate firm that was renamed Natixis Capital in 2006.
This February the Natixis Capital team, led by van Oost, spun out via a management buyout from French bank parent Natixis and was renamed Captiva Capital, where van Oost remains a managing director.
Over the past decade, he and his team have invested more than $11 billion in real estate in Europe. It is a long-term goal that he hopes to replicate in Asia, mostly drawing on capital from Captiva’s investor base, of which about 75% are European institutions – largely pension and insurance firms. The remainder are Asian investors, including sovereign wealth funds.
Yishan is targeting an internal rate of return of 20-25% on investments in assets in Southeast Asia, including commercial, residential, hospitality and logistics properties. It has already committed $25 million of its own capital in the sub-region, including a hospitality project in Cambodia.
The firm announced yesterday two partnerships in Indonesia, where most of Yishan’s 14 staff are based and where van Oost sees the logistics, retail and residential real estate sectors benefitting most from the country's emerging middle class.
It has partnered Colliers International to create joint venture Cornerstone Asset Management, which will manage shopping malls across Indonesia that have been invested through capital raised by Yishan. It is understood Colliers will not invest money into the venture.
Yishan has also teamed up with Indonesia’s Rodamas Group, an industrial firm run by the ethnic Chinese Tan family, to form joint venture Axiomas Investment. The JV will develop and manage logistics parks and other industrial properties in Indonesia, with plans to deploy $100-150 million over the next 18 months. It is understood Rodamas will co-invest in the venture alongside Yishan.
Aside from Indonesia, where most of Yishan’s focus is at the moment, van Oost is keeping an eye on markets such as Thailand, Malaysia and the Philippines, which he deems attractive, “but the pricing level has to adjust [downwards] before we jump”, he says.
In Singapore, niche opportunities are being sought as the market has “very high” prices. “We don’t see obvious buying opportunities today in Singapore,” says van Oost.