LaSalle Investment Management, a division of the world’s second largest commercial real estate brokerage, plans to partner with Australian developers and take on more risk to invest in the nation’s property market.
The unit of US-based Jones Lang LaSalle Inc is actively seeking tie-ups in Australia to increase its investments in the office and logistics space, and may announce a deal in the first half of this year, Asia-Pacific chief investment officer Ian Mackie told reporters in Sydney on Tuesday.
‘We’re in discussions with a variety of developers,’ Mr Mackie said, without naming the companies. ‘We’re in the act of pursuing, considering, negotiating deals.’
The partnerships would aid LaSalle’s plans to increase its exposure to Australia’s commercial property market through its US$3 billion Asia Opportunity Fund III, Mr Mackie said. LaSalle, which manages some US$40 billion in real estate investments globally, expects more growth opportunities in this part of the world, particularly in prime office properties in city centres, the company said.
Australia’s lack of distressed and value properties means that LaSalle would have to move towards riskier projects to take advantage of growth and obtain the ‘mid- to high teen’ returns suitable for its opportunities fund, Mackie said.
The company will take on more risk in spending some of the remaining US$2 billion in the opportunity fund to invest in Australia, he said. LaSalle expects effective rental growth of up to 7 per cent annually for commercial properties in Australia.
‘In some countries, such as Japan, we can buy standing assets and make the sort of returns that are appealing to an opportunity fund,’ Mr Mackie said. ‘We’re under no illusion that we can do that in Australia. So we’d expect to go further out on the risk curve and become involved in development projects.’
Source : Business Times – 11 Feb 2010
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