News: Global real estate investors need local partner

(RTR 27/06/2006) New York - Going global means not doing it alone but with a local partner, leading figures in real estate said on Monday while attending the Reuters Real Estate Summit in New York.

"We've decided to focus our attention on India as a place to get involved in real estate investing," said John Jacobsson, Apollo Real Estate Investment Advisors partner. "The partner is extraordinarily helpful."

Apollo has partnered with the Sun Group for its ventures in India, where Apollo is hoping to generate high returns on new developments and existing properties. Apollo is raising about $500 million in equity for an Indian fund -- buying power that could rise to $1.5 billion through debt financing.

Real-estate investors, searching for a way to diversify their holdings and boost returns, are increasingly looking abroad for investments. But real estate is a local business and requires local know-how and relationships, the executives said.

Good partners were the key to Wal-Mart Stores Inc.'s success in China, said the head of Jones Lang LaSalle Inc., one of the world's largest real-estate investment service firms. But Carrefour, the world's No. 2 food retailer after Wal-Mart, tried to go into Japan alone and the results were less successful, he said.

"The first thing retailers need is a good partner," said Colin Dyer, Jones Lang's CEO. "Wal-Mart found good partners, critical to navigating local environment."

Jones Lang formed a $1 billion opportunity fund earmarked for Asia. In China alone, there are currently 300 malls under development, he said.

Tishman Speyer, which owns and manages some of the most recognized properties in the world, formed a $1 billion-plus joint venture with ICICI Ventures, the private equity arm of ICICI Bank Ltd., to build both office and residential properties.

"We're headquartered in Bangalore, but we're looking at deals in half a dozen major Indian cities," said Rob Speyer, senior managing director. "We're certainly looking beyond Bangalore and Bombay."

But in China, Tishman Speyer is putting together its own pool of local real-estate talent.

"We are creating our own platform over there," he said. "We are partner with a U.S.-based investment company called GSC. We're opening a business there, but we're not partnering with a local Chinese operator."