Morley aims for US$10b Asia-Pac property portfolio

July 9, 2008
Morley aims for US$10b Asia-Pac property portfolio
By EMILYN YAP

MORE property deals in Singapore and the region could be in the
making for Morley Fund Management, as it aims to build a US$10
billion real estate portfolio across the Asia-Pacific in the next
four to five years.

The Aviva-owned asset manager now has about US$1.3 billion committed
to real estate in the region. It made its debut in the Asia ex-Japan
property market recently with the acquisition of Commerce Point from
City Developments Ltd for about $180 million or $2,200 per square
foot (psf) of net lettable area.

The deal, first reported by BT last month, was finalised last
Thursday.

Morley has also set its sights on retail property in Asia-Pacific
but 'it is a tightly-held market, including in Singapore', says
Morley's head of Asia real estate Nick Ridgewell.

Retail property as an investment class offers less cyclical and
volatile returns than, say, office property, he reckons.

There is also a link between retail property returns and economic
performance. And affluence in the Asia-Pacific region is rising, he
says. Although the market for office properties in Singapore is
tight, Mr Ridgewell still expects some rental growth up to 2009.
Rents signed for recent deals in Commerce Point were $13 psf, he says.

New supply of office space may moderate rents subsequently but Mr
Ridgewell reckons that 'once we get through the pool of developments
due to hit the market from 2010 to 2013, there may not be a lot
coming after the next couple of years'.

In fact, Morley's investment in Commerce Point is for the long term,
he says. 'We are a core investor. We are not expecting this to
provide us with an opportunistic type of return. We are predominantly
known to be looking for long-term solid returns, a lot of it through
income and some capital growth.'

The asset manager plans to enhance Commerce Point's net lettable
area. The building's vacancy rate is below 10 per cent, a level
Morley is comfortable with. Morley will undergo a rebranding exercise
in September and will be known as Aviva Investors. The asset manager
has been expanding its Singapore office as business in the region
grows.