Goodwin Gaw: China’s Property Market May See 10%-15% Price Drop

In this episode of China Money Podcast, our featured guest is Goodwin Gaw, managing principal and founder of Hong Kong-based private real estate management firm, Gaw Capital Partners, which manages US$7.5 billion. Gaw talked with our host, Nina Xiang, about where in the Chinese property market he sees price corrections this year, why his firm is staying on the sidelines investing in Hong Kong, and his thoughts on Gaw Capital’s performance. Read an excerpt below, but be sure to listen …

Gaw Capital Acquires Beijing’s Pacific Century Place For $928M

Hong Kong-based private equity real estate firm Gaw Capital Partners (listen and watch Gaw Capital’s founder Goodwin Gaw talking to China Money Podcast here) says that it has signed a conditional agreement to acquire a Beijing commercial property project called Pacific Century Place, for a total of US$928 million, according to a company statement.

Gaw Capital, CITIC Are Asia’s Most Consistent Performing Real Estate Funds

Three Asia-based private real estate fund managers, Hong Kong-based Gaw Capital Partners and CITIC Capital, as well as India’s HDGC Property Ventures, are the most consistent performing firms in the region, based on a new ranking compiled by research firm Preqin. Using quartile rankings based on both the return multiple and internal rate of return (IRR), Preqin identified those private real estate managers who achieved the most consistent returns over the years.

Gaw Capital Leads Deal Acquiring London’s Exchange Tower

The real estate investment arm of U.S. asset management firm BlackRock Inc. has completed the sale of a high-rise office building in London to a group of Asian investors led by Hong Kong-based private equity real estate firm Gaw Capital Partners for £191million (US$310 million), according to a company announcement. Click here to see Gaw Capital’s founder Goodwin Gaw on China Money Podcast Gaw Capital acts as the adviser and co-investor in this deal for a pool of Asian investors …

Gaw Capital Advises Ping An On Acquisition of London Office Building

Hong Kong-based real estate private equity firm Gaw Capital Partners has acquired London’s Tower Place on behalf of Ping An Insurance Company of China, Ltd., according to an emailed statement. No deal terms were disclosed. This is the second property acquired by Gaw Capital for Ping An Insurance, following the acquisition of Lloyd’s building in London’s financial district in July 2013. In addition to leading the acquisition process, Gaw Capital is also providing debt financing advising with this transaction.

Gaw Capital Acquires Vietnamese Property Portfolio For $106M

Hong Kong-based real estate private equity firm Gaw Capital Partners has bought a portfolio of real estate projects in Vietnam from a company named Indochina Land Holdings 2 Limited for US$106 million, according to a company announcement. The portfolio is comprised of Indochina Plaza in Hanoi, Hyatt Regency Danang, and two additional land development projects in Danang and Ho Chi Minh City. The deal expands Gaw Capital’s presence in Vietnam, and follows an investment in a mixed-used development project, Empire …

Gaw Capital Leads $700M Purchase Of Seattle Office Building

An investor consortium led by Hong Kong-based real estate private equity firm Gaw Capital Partners has agreed to acquire the tallest skyscraper in downtown Seattle for over US$700 million, according to someone with close information of the deal. The identities of the consortium’s other participating investors are not known. The group is buying the 76-story office building Columbia Center from Boston-based private real estate firm Beacon Capital Partners, who reportedly acquired the property for US$621 million in 2007. The property, …

Gaw Capital, Vailog China Target Warehouse Investments

Hong Kong-based real estate private equity firm Gaw Capital Partners has agreed to form a joint venture with Chinese logistics developer Vailog China to acquire and develop modern warehouses in China, according to an announcement. The partnership, which is to be done through Gaw Capital Real Estate Fund IV, expands Gaw’s business in China to logistics properties. The firm has previously invested in residential, commercial offices, retail malls, serviced apartments, and hotels in China.

Canada’s Ivanhoe Cambridge And CBRE Invest In Logos China

The real estate investment arm of Canada’s second-largest pension fund, Caisse de depot et placement du Quebec, has joined CBRE Global Investment Partners to invest in Asian logistics real estate firm Logos Property Group to expand its China investments, according to a company announcement. Even though the specific investment amount is not disclosed, the committed capital will allow Logos to make warehousing investments of up to US$400 million, says the statement.

Gaw Capital Leads $938M InterContinental Hotel Purchase

InterContinental Hotels Group PLC has agreed to sell its full ownership of InterContinental Hotel Hong Kong to an investor consortium advised and managed by Hong Kong-based private real estate investment firm, Gaw Capital Partners, for US$938 million, according to a company announcement. The consortium, named Supreme Key Limited, is owned by Hong Kong-listed property investment conglomerate Pioneer Global Group, as well as separate account investors advised by Gaw Capital, says a person with close knowledge of the deal.

2015: A year of transformation for the China logistics market

SHANGHAI, March 14, 2016 /PRNewswire/ — Cushman & Wakefield, a global leader in commercial real estate services, published its latest report, "China Logistics H2 2015″. According to the report, GLP, as an international logistics player and the current market leader in the China logistics market, still holds the largest logistics market share of any company in China. However, this No.1 position is currently under threat, as Ping An, with a portfolio of 5 million sq m of logistics projects, has already securely established itself in the No.2 position, providing a clear indication that major local brands are now rapidly evolving into giant logistics players, in their own right. Major domestic corporations are currently in the midst of making major inroads into the high end logistics market. These include such major "cross industry" players such as China Vanke and Ping An, as well as two state backed players from Shenzhen, BLOGIS and Shenzhen International Logistics Development Limited. Over the past two years, expansion efforts of these companies have displayed a head of steam which has been strong enough to propel them into the ranks of the top ten logistics industry companies in China.

Andrew Ness, Head of Research, Greater China, said: "Over the short term future, China’s Tier I cities are likely to continue to witness the trend of industrial land prices appreciating faster than industrial rents, resulting in a situation in which logistics facilities investment opportunities are now de facto concentrated in Tier II and III cities. At present, logistics development projects are heavily clustered in the PRD, YRD, Bohai Rim region as well as some major cities of the interior. It is anticipated that within the course of the next 2-3 years, some tier II and III cities will provide this sector with sizeable development potential."

Tony Su, Head of Industrial & Logistics Property Services, China, cited: "For the China logistics industry, it marked a year of transformation. This was not only because China’s GDP dropped below the level of 7%, indicating that consolidating pressure within the economy is on the rise, but in addition the ongoing contraction in China’s manufacturing sector has added yet another area of uncertainty for the logistics industry. At the same, the continued precipitous growth of e-commerce in China, and particularly the RMB 91.2 billion in sales racked up by China logistics giant Taobao during the 2015 "Singles’ Day" shopping festival, which shattered all existing records e-commerce sales recorded in any one day.. With this recent flurry of activity, then what is it that makes us forecast that 2015 is a year in which China’s logistics industry will experience fundamental transformation."

1. Logistics facilities developers face increased difficulty in acquiring land

We believe that almost all of the traditional logistics property companies shared one common challenge in 2015—namely, that as compared with previous years, and even with respect to some second-tier or third-tier cities, it was still quite difficult to acquire land for logistics use. Not until the government makes fundamental changes in its business tax contribution policies will the severe bottleneck presently posed by logistics site acquisition be significantly eased. This is the certainly the largest single issue that traditional logistics property companies are facing at present.

2. Logistics property companies step up the capitalization pace

During 2014 and 2015, the subject how to best capitalize on real estate assets emerged as a major theme in the market place. Some formerly private traditional logistics developers prepared to make initial public offering of their shares to the public, as they prepared for public listing. Others entered into partnerships with overseas funds in order to expand their capital base and while other sought to raise capital via domestic financing channels.

Notable capital raising events which occurred within the year included the following: RRJ and Temasek Holdings carrying out a second round of capital injection into the Yupei Group following the first round of injection, by the Carlyle Group.  Brookfield Group having integrated the global logistics operations of Gazeley and IDI, and commenced operating them under single, unified brand in China. Canadian pension funds and Goodman Group launched a plan to place additional capital into the China logistics market. Gaw Capital and Vailog established a strategic alliance in China.  Blackstone became a shareholder of Vanke Logistics. Also, e-Shang recently purchased Redwood’s Pacific business, using capital provided by Warburg Pincus. 

"From the perspective of international capital, one of the main attractions presented by the domestic real estate market during the past 10 years was the expectation of continued appreciation in the RMB. Along recent change in management of the exchange rate, Capital outflows from China are expected to pick up pace, as RMB enters more deeply into its depreciation cycle. Therefore, adequate measures to balance sources of capital should be taken into consideration when planning the execution of the capitalization expansion moves." Tony Su added.

3. Major re-shuffle of the China logistics property market

As mentioned above, many brands that had never previously appeared in the China logistics property market have suddenly made an entrance into the marketplace. Three most outstanding examples were the recent emergence of Vanke, Ping An and Cainiao onto the China logistics scene. Vanke is a traditional merchant homebuilder, so while its entrance into the logistics scene appeared to be an abrupt move, in fact it was a carefully planned step. By mid-year 2015, Vanke had established logistics property market development subsidiary, which was already operating as a separate brand, apart from the parent company. A similar move was made by the Ping An Group, whose entry into the logistics market displayed the same degree of determination.

Building on its strength as a leading financial services provider, Ping An established a logistics property business department, which achieved astonishing results. Shortly after being established, the department began operating independently and was subsequently reconstituted as a logistics property investment company.    

Cainiao Network relied on its major backer, Alibaba, to develop a method leveraging on its network of community warehouses + express delivery services.  Cainiao is not operated in the same manner as a traditional logistics property enterprise, but the size of its land reserve will play a decisive role in influencing future market development.

According to Tony Su: "Even though GLP still accounts for more than 50% share of the logistics market in China, its leading position has recently been heavily challenged by some newer market entrants. Among these new newcomers, the rapid expansion of Yupei, E-shang and Ping An will all substantially impact on overall performance of the logistics market. Thus, the market is currently witnessing a re-shuffling of the position of its major players, which commenced in earnest in 2015."

4. "internet +" and its indirect challenge to logistics property market

Nowadays in China, as accelerating pace of new technology is changing the face of how business is done, influence of internet+ on traditional industries continues to rapidly expand. The real estate industry has also come under increased scrutiny due to capital intensive nature of its developing and and holding core assets. Furthermore, as compared to residential, office and commercial sector, logistics sector property is less frequently transacted and less "alluring" by nature. However, notwithstanding this fact, it is evident now that internet+ logistics industry has the potential to turn China’s logistics sector on its head.

Companies which are making big waves in the logistics sector include internet companies like "56pingtai". 56pingtai is a company that was established less than two years ago and is mainly engaged in 4th party logistics services, which are based on the "highway port" concept. The nature of the company’s business model is to prepare for the allocation of goods ordered online to small and middle sized logistics firms or individual truckers by using its "Sky network system". In the meantime, 56pingtai monitors and organizes truckers’ delivery schedules through its national "Ground network", comprising a network of logistics nodes established in the main logistics cities, and which effectively eliminates a sizeable portion of empty truck return runs, thereby improving logistics industry efficiency. However, the main part of its profit is not derived from charging rent, but rather selling cars and auto parts, truckers’ insurance, and even provision of F&B services. However, the success of companies like 56pingtai has raised the question that once this type of business is accepted by the market and commands a leading position, will the traditional logistics facility leasing model be abandoned by present operators due to its low profitability? Will the logistics property market continue to operate as it previously did, if this really happens? But the increasing sophistication of modern technology does pose kind of a hidden challenge to China’s logistics industry. So is it more correct to perceive Internet+ as remaining suspended above the China logistics industry like the sword Damocles or is in fact more accurate to view the two industries as in the midst of becoming so tightly intertwined that they can never be unravelled.

***

The successful merger of Cushman & Wakefield and DTZ closed September 1, 2015. The firm now operates under the iconic Cushman & Wakefield brand and has a new visual identity and logo that position the firm for the future and reflect its trusted global legacy and wider history. The new Cushman & Wakefield is led by Chairman & Chief Executive Officer Brett White and Global President Tod Lickerman. The company is majority owned by an investor group led by TPG, PAG, and OTPP.

About DTZ/Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman & Wakefield is among the largest commercial real estate services firms with revenues of US$5 billion across core services of agency leasing, asset services, capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation & advisory. To learn more, please visit www.cushmanwakefield.com or follow us on Weibo/WeChat (DTZ_China).

China’s Logistics Market Disrupted By New Local Players

Singapore-based Global Logistic Properties Ltd. (GLP) remains the market leader with an over 50% share of China’s logistics sector last year, but some new local players are quickly catching up and may soon threaten its number one position, according to a report by real estate services firm Cushman & Wakefield.

naked Hub Announces Expansion Financing

Fast growing co-working network announces closure of its first tranche B round funding to accelerate regional expansion

SHANGHAI, Nov. 1, 2016 /PRNewswire/ — naked Hub, a Shanghai-based network of co-working spaces, announced the closure of its first tranche B round funding from a fund managed by Gaw Capital Partners today.

naked Group  a lifestyle and hospitality company  stormed the co-working market 10 months ago with the naked Hub brand and 8 hubs in prime Shanghai neighborhoods in 2016: Xintiandi, Xuhui (Hunan Lu and Fuxing Lu), shopping area (Nanjing Lu), Financial District (Century Avenue), transportation hub (Hongqiao Hub), Jingan and Gubei.

Gaw Capital Partners is a strategic investment company focusing on real estate markets worldwide. With this expansion funding, naked Hub will not only accelerate its regional expansion, but also enhance its property resources via Gaw Capital Partners. naked Hub aims to add 24-30 new locations (approximately 150,000 square meters and 30,000 members) across mainland China, Hong Kong, Singapore and other key Southeast Asian cities.

naked Hub, famous for its unique look and feel, has been recognised for its innovative and community-centric design, including: Best Workspace, Best Meet Up, Best Stair, Best Lighting (Uban 2016 Best China Office Award), The 11 Best Coworking Spaces in Asia (Forbes Magazine), Best Innovative Space (Shanghai Home Decor Design Week), Top 10 Design Spaces in Shanghai (Design Week) and Coolest Places to Work in Shanghai (Shanghai WOW). naked Hub is an offline and online platform for freelancers, startups, and SME professionals to collaborate, interact and do business with each other. Even MNCs who desire to keep their fingers on the pulse of the market are attracted to its flexible and communal workspaces. Providing its members  "Hubbers" with a collaborative workspace and a vibrant community, naked Hub is co-working redesigned for China and Asia.

Co-working is booming, growing 71% annually from 2007 to 2015 and projected to grow 68% annually from 2016 to 2018. Asia is only just realising the many advantages of co-working spaces compared to traditional offices. naked’s confidence comes from its Chinese roots, with many years of experience building the top luxury resort and lifestyle brand in eastern China, and a loyal customer base that is 92% Chinese. The naked management team is led by proven China market veterans.

"We are delighted to be part of the growing trend in the co-working office market especially with an operator with proven commitment and track record in China. The lifestyle and hospitality approach of naked Group is very similar to Gaw Capital’s DNA, passion, responsibility and creativity. The potential synergies between the two groups will further enhance both of our positions as market leaders in the region," said Humbert Pang, Managing Principal Head of China for Gaw Capital Partners.

"The first time you enter a naked Hub is a memorable experience due to the community vibe and design of the Living Room. As our community network scales, our members are already seeing increased business from within the naked Hub community. We’re excited to have this additional capital to deliver this service to a much larger number of members in various cities," said Jonathan Seliger, CEO of naked Hub.

"Like a tech company, naked Hub moves fast and innovates in an agile way. I believe we already have the strongest in-house user experience and technology team of any co-working operator in Asia and our innovations in online-and-offline service experience for our members has only just begun," said Dominic Penaloza, CIO of naked Group.

"Beginning with our home base, Shanghai, naked Hub will grow to become a top player in co-working across China and Asia. We now have enough fuel to add 24-30 more hubs in 2017. Very proud of the entire naked team," said Grant Horsfield, Founder of naked Group.

About naked Hub

naked Hub is work redesigned.  Our innovative and beautiful workspaces are home to a diverse community of companies and individuals who interact, collaborate, and do business with one another.

Offering unprecedented freedom, financial flexibility, and an invaluable online-to-offline community, naked Hub is a platform designed to help start-ups, SMEs and MNCs across all industries, to increase their success in business.

For more information, visit http://www.nakedhub.cn

About naked Group

naked Group was established in 2007 and is focused on lifestyle and hospitality products. From unique eco-friendly resorts to immersive learning to creative workspaces, naked is rethinking how we connect with people, spaces and ourselves. naked has a big dream in a changing world to make life more fun, healthy and naked for all to enjoy.

The company’s foundation is in hospitality, first with naked Home  a boutique mountain getaway in Moganshan, Zhejiang province  and later award-winning naked Stables — the first LEED Platinum certified resort in China. Garnering attention from international and domestic media and earning awards in its industry, naked Stables put Moganshan back on the map of China’s must-go destinations. The resort business will expand to include new projects: naked Castle (Moganshan), naked Water (Taihu, Suzhou), naked Spring (Shaoxing), naked Creek (Chengdu), and more.

Over the years, naked Group has launched other businesses  naked Hub, naked Discovery, naked Things and naked Bite, encompassing co-working, immersive learning, unique branded products and healthy and tasty food. naked Group is a community devoted to inspiring people to live well, live light, live healthy and "live naked".

For more information, visit http://www.livenaked.com

About Gaw Capital Partners

Gaw Capital Partners is a uniquely positioned private equity fund management company that focuses in real estate markets in greater China and other high barrier-to-entry markets globally.

Specialising in adding strategic value to under-utilised real estate through redesign and repositioning, the firm’s investments span the entire spectrum of real estate sectors, including residential development, offices, retail malls, hospitality and logistics warehouses.

Gaw Capital Partners runs an integrated business model with its own in-house asset management operating platforms in retail, hospitality and property development.

Gaw Capital Partners currently manages four real estate funds targeting the Greater China and Asia Pacific region. Additionally, the firm manages opportunistic funds in Vietnam and the US along with a hospitality fund targeting the Asia Pacific region. Gaw Capital also provides services for separate account direct investments in the global markets. Since its inception in 2005, Gaw Capital Partners has raised equity of USD6.3 billion and commands assets of USD12.7 billion under management as of the second quarter of 2016.

For more details, please view: http://www.gawcapital.com

Grant Horsfield Wants To Get HSBC And Coca-Cola "Naked"

Grant Horsfield, founder of Shanghai-based resort and co-working space operator naked Group, always sees things differently. When others saw dilapidated farm houses in China’s countryside, he envisioned seclusive luxury resorts. Now, a year after entering China’s co-working space, the South African entrepreneur is convinced that the future of his multi-pronged hospitality and property business lies in fast execution.