Blackstone Group aims to raise the largest real estate fund devoted to China and Asian markets, despite reports of a looming slowdown in the market.
Blackstone, one of the world's largest real estate investors, plans to raise $4 billion devoted exclusively to Asia, according to the Wall Street Journal. In a market where many investors are demonstrating caution, Blackstone sees investment opportunity.
"There's not a whole lot of competition out there...just a few niche guys," Timothy Walsh, director of New Jersey's state pension fund council, told the Journal. His group committed $500 million to the new Blackstone Asia fund.
Overall, Asian economies are among the fastest-growing in the world, but recent economic data has been less encouraging for investors. China recently reported gross domestic product growth slowed to 7.7 percent year over year in the first quarter, a steep drop from the boom years.
In previous years many investors were unsuccessful in the region including a J.P. Morgan fund, which lost a high-end building to foreclosure in the Chinese city of Dalian, according to the WSJ. Other firms are scaling back or exiting their investment funds in the region including Bank of America, Citigroup and American International Group.
But the prospect of high yields has many investors reconsidering Asia, as returns decline in other parts of the world. Economists expect Blackstone to meet its fundraising goals, according to the WSJ.
Since 2010, Blackstone has invested about $1.5 billion in Asian property as the region rebounded from the global economic downturn, WSJ reports. In 2012, Blackstone purchased the Huamin Imperial Building, a grade-A office and hotel complex with a value of $287 million, from a local distressed developer, according to the paper.
Blackstone is not talking, at this point. But in a January conference call, chairman Stephen Schwarzman said, "It's a very important initiative for us to become the most active, opportunistic real-estate investor in Asia."
Blackstone will look to exploit declining home prices as the Chinese government recently announced new regulations for property investors in an effort to derail skyrocketing home prices.