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October 16, 2009

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Home » Business » Real Estate

Grosvenor switches to commercial property

GROSVENOR, a London-based private fund firm, said it plans to sell its two residential assets in Shanghai and switch its focus to commercial property in pursuit of better cash flow and yields.

Grosvenor, whose business covers investments, property development and fund management, is also negotiating a number of deals in China for its retail fund and expects to close the first acquisition very shortly.

"The rental market has not performed in the way that we anticipated," said Nicholas Loup, chief executive of Grosvenor.

"The leasing market in China has been affected (by the global crisis), and rents fell significantly in the last 12 months."

Grosvenor Place at Lakeville Regency and Belgravia Place at Huashan Park will be sold. The company plans to reinvest the proceeds in commercial property, where it expects better yields.

"We are looking to generate more income and increase cash flow," said Loup. "Investment properties are very important for enhancing cash flow which helps to lay a foundation to grow business in other areas."

Grosvenor aims to grow its business in Asia to at least 20 percent of the group capital, against the current 8 percent, over the medium term. Besides Shanghai, it is also keen on Beijing, Shenzhen, Chongqing and Dalian.

"The retail property sector is rather resilient in the current economic condition and has growth prospects," said Loup.

The company will start planning another larger fund in China next year.

"We have plans to develop a yuan fund in Shanghai, which will be very important and helpful for property development in China," said Loup.


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