UBS turns to Chinese commercial real estate

Pedestrians are reflected below a UBS office building logo in New York, the US. [File photo/IC]

UBS AG, Switzerland's biggest bank, is planning to expand its Chinese property investment business with a move into commercial real estate.

Office, retail and industrial properties are "where investor demand is certainly moving to" in China, Trevor Cooke, head of global real estate for Asia-Pacific at UBS Global Asset Management, said.

"The stock of investment grade assets in China is growing at about 35 percent per year."

The bank will work with a developer or a company with an ability to source existing assets, he said.

Several cities in China are expected to experience improving rental demand for commercial space on the back of recent regulatory changes, including policies to boost growth in certain areas, CBRE Group Inc said in its Asia Pacific Office MarketView report. China was among the five most sought-after markets for retailers looking to open stores this year, a separate report by the broker, released in March, showed.

UBS already invests directly in Chinese residential property through a joint venture formed in 2008 with Shenzhen-based developer Gemdale Corp. The bank is planning a second residential fund, with an initial close of about $100 million and a total of at least $350 million, Cooke said.

"It's hard not to acknowledge the macro sentiment around residential property in China right now, or the concerns about a Chinese bubble," Cooke said. "But that just puts the emphasis on the asset management credentials."

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