APG to Increase Asia Property Investments to Tap Economic Growth

APG Algemene Pensioen Groep NV, which manages about 299 billion euros ($393 billion) for the largest Dutch pension fund, said it will increase investments in Asian properties to tap the region’s economic growth.

The Amsterdam-based pension fund manager has invested 900 million euros in private real estate across Asia in the past two years, boosting the investment to 4.8 billion euros, said Daan Van Aert, head of strategic real estate at APG Investment Asia Ltd., a subsidiary of APG, in an interview in Hong Kong on April 20. About 70 percent of APG’s Asia allocation is in developed markets such as Hong Kong, Singapore and Australia, while the rest is in emerging marketsincluding China and India.

APG, which started investing in property in Australia in 1998 and in other countries in Asia in 2003, is looking for returns in the region with the world’s fastest-growing economic growth as the U.S. recovery remains feeble and Europe grapples with a sovereign debt crisis. Developing Asia will expand 7.3 percent this year, while the economy of the euro area will contract and the U.S. will grow 2.1 percent, according to the International Monetary Fund.

“There is still room for us to grow,” said Hong Kong- based Van Aert, declining to say how much APG planned to invest in the region. “Globally, I’m convinced the growth engine in the world is Asia. From that point of the view, I think more investments will be in Asia because of the growing economy.”

APG is the asset manager for Stichting Pensioenfonds ABP, the world’s third-largest pension fund, according to data from Towers Watson & Co.

APG has 2.7 billion euros invested in listed real-estate companies and real-estate investment trusts, and 2.1 billion euros in private funds, joint ventures and co-investments, the firm said.

China Investments

APG is seeking to increase investments in China, its largest emerging market exposure in Asia, despite the country’s housing curbs, said Van Aert. The company’s 0.7 billion euros of investments in China accounted for 15 percent of its total Asia allocation, he said.

“It could be the right timing now to look at China again when prices go down a little bit,” he said. “There’s still a strong demand of people needing better quality housing. Our belief in China is a long-term story.”

The Chinese government has increased down payments and mortgage rates, and imposed home purchase restrictions in 40 cities as part of efforts in the past two years to curb speculation in the property market that threatens affordability. March home prices fell in a record 37 of 70 cities tracked by the government from a year earlier. Premier Wen Jiabao has pledged to “resolutely” maintain the tightening policies.

“The tightening policies may stabilize the market and can make it grow more sustainably in the future,” Van Aert said.

Australia Logistics

In February, APG committed $150 million for the first close of an as much as $500 million fund with China Overseas Land & Investment Ltd., the biggest Chinese developer listed in Hong Kong, and ICBC International Holdings Ltd.

APG finds logistics and retail properties in Australia attractive, because it sees the market as being the most stable and one of the most transparent in Asia, according to Van Aert.

About 50 percent of APG’s real estate investments are in Europe, 30 percent in the Americas, and 20 percent in Asia, said Patrick Kanters, Amsterdam-based managing director of real estate at APG, in an interview in July.