Brookfield Asset Management, the Toronto-based global asset manager with landmark properties including Brookfield Place in Manhattan and Bank of America Plaza in Los Angeles, has plans to aggressively expand its portfolio of commercial space in China. According to a Wall Street Journal report, last month Brookfield bought nearly 22% interest in a unit of Hong Kong-listed property developer Shui On, which built the popular Xintiandi commercial complex in Shanghai.
Bruce Flatt, Brookfield Chief Executive Officer, has said that after spending recent years investing in distressed developed economies, the firm is bullish on China's office sector and focused on the long term, with the firm's new venture looking to tap into Shui On's local insights and ultimately yield at least 15% on equity.
According to real-estate consultancy CBRE, the office markets in tier-two Chinese cities—large cities that nonetheless lack the stature of leading Chinese cities such as Beijing and Guangzhou—are often more risky and at an early, uncertain stage of development. China's property market generally has a two-tiered structure in which top cities such as Shanghai and Beijing see strong demand and liquidity, but markets in second- and third-tier cities face a supply glut.
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