Savills Investment Management to grow Asian footprint

LAST November, Savills Investment Management divested two assets in Singapore — its stake in China­town Point to partners Perennial Real Estate Holdings and Singapore Press Holdings for S$92.6 million, and 77 Robinson Road to CLSA Capital Partners for S$530.8 million. “I think the timing of the disposal of 77 ­Robinson Road was fortuitous,” says Justin O’Connor, the London-based CEO of Savills Investment Management, who was in Singapore recently.

Following the sale, Savills Invest­ment ­Management’s sole asset in ­Singapore is the 13-storey office block Anson House, which was acquired in 2014 for S$172 million, or S$2,252 psf based on net lettable area of 76,362 sq ft. “There are no current plans to sell that,” says O’Connor. “We’re still implementing the business plan that we had for the asset from the beginning. But we’re always trying to react when the market changes.”

Anson House was acquired by ­European fund manager SEB Asset Management in 2014, and the latter was in turn acquired by Savills Investment Management in 2015 for €21.5 million.

Both 77 Robinson Road and ­Chinatown Point were also legacy assets purchased by funds managed by SEB Asset Management. For instance, 77 Robinson Road was one of the first investments in Asia purchased in 2007 for the open-ended real estate fund, SEB Immo­Invest. It was the largest building in the fund in terms of market value, with 293,265 sq ft of net lettable space, and was sold after a ­holding ­period of 10 years.

The 60% stake in Chinatown Point was ­acquired in 2010 by SEB Immo­Portfolio ­Target and a special fund of Savills Investment ­Management, with each holding a 30% interest.

Towards the end of last year, Savills Invest­ment Management sold a third legacy asset in Asia, namely Tama Center Building in the ­Tokyo metropolitan area. The building was purchased by SEB ImmoInvest in 2007. The sale of Tama Center Building marked the sixth transaction in Japan by Savills Investment ­Management in 2016.

The aggregate market value of the three ­assets in Asia that were sold by Savills Invest­ment Management totalled €660 million (S$1 ­billion). Meanwhile, last November also saw Savills Investment Management conclude the sale of a portfolio of 17 properties in Germany for €630 million to asset manager WealthCap.

Savills Investment Management is finalising two funds, with mandates to invest in Japanese real estate amounting to US$300 million (S$418 million) each. In the pipeline is Asia Fund IV, which rides on the success of the earlier Pan-Asian funds in the ­series. Savills Investment Management also has another Japanese fund, namely the ­Greater ­Tokyo Office Fund.

Investors in Savills Investment Managements’ funds include pension funds, ­insurance companies, family offices and high-net-worth individuals. While 70% to 80% of its investors are from Europe, the remaining 20% to 30% are from Asia and the US, says ­O’­Connor. And the number of mandates from Asia is ­growing, he adds.

A case in point is its Greater ­Tokyo Office Fund, in which Straits Real ­Estate, a subsidiary of Singapore-­listed Straits Trading Company, invested US$52.3 million of a total of US$82 million raised in the initial round of commitments in 2015. The fund has continued to raise funds, drawing in another S$150 million in subsequent closes.

For the whole of 2016, Savills Investment Management brokered US$5.3 billion worth of real estate deals, of which Asia-­Pacific ­contributed US$868 million ­— a ­record transaction volume both globally and in Asia. ­O’Connor attri­butes the growth in Savills Invest­ment ­Management’s business in Asia partly to the expansion of its presence in the region.

The firm currently has about 30 people in the region and plans to double the number over the next two years, depending on the growth of its assets under management in the region, he adds. It currently has ­offices in Hong Kong, Singapore, Sydney and Tokyo, with a newly opened ­office in Shanghai, and plans to open one in Seoul later this year. The com­pany works in “hubs” around the region so it can be nimbler and more ­flexible, says O’Connor.

O’Connor considers Singapore an important hub for the group and sees opportunities in investing in the commercial and logistics sectors in the city state over the long term.

Today, Savills Investment Manage­ment has about US$1.6 billion in ­assets under management. The ­figure is projected to hit US$2 billion by end-2017.

This article first appeared in The Edge Property Singapore, a pullout of The Edge Singapore, on April 3, 2017.

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