Wednesday, April 27, 2011

Interviews: Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate & Mr. Frank Khoo, Global Head of Asia

The AXA Group has been managing real estate portfolios for over 30 years. The different real estate units were consolidated with the strategic decision in 1999 to create AXA Real Estate Investment Managers. This was done so to complete the consolidation
of AXA’s real estate management capabilities throughout Europe.
At the same time, it was considered that there was a significant opportunity to leverage this infrastructure, in order to become a leading panEuropean real estate investment manager offering services to both external institutional investors as well as existing AXA clients.
Since 2006, AXA Real Estate Investment Managers has expanded its presence in Asia with offices in Tokyo and Singapore. In 2010, AXA Real Estate Investment Managers
became AXA Real Estate and expanded its global footprint with the creation of a capital raising team based in the United States.
As noted by Mr. Frank Khoo, Global Head of Asia, AXA Real Estate, today, the company is the world’s second largest real estate fund and asset manager, and the largest in Europe, with €40 billion of assets under management. It has over 120 external institutional clients spread across the world, in addition to managing funds for around 10 AXA insurance companies.
“With 500 real estate people operating in 22 countries, AXA Real Estate's competitive advantage stems from its global fund management expertise combined with extensive on-the-ground deal sourcing, asset management and development execution capabilities,” he said.
The company structures and actively manages investment products, seeking wide-ranging opportunities along the risk spectrum to deliver targeted returns commensurate with clients' risk profiles, through a variety of investment strategies.
These range from core to opportunistic, country-specific to geographically diversified, sector-specific to multi-sector, with the capacity to invest at all levels of the capital structure.”
“Our core business is real estate fund, asset, and development management. We have extensive local expertise in all of the major property types. In addition, AXA Real Estate offers specialist local expertise in areas such as transaction execution, development, asset and project management, tax, legal, accounting, risk management and compliance.”
Mr. Khoo joined the company in 2008 to help the company expand its operation in Asia. Appointed as Global Head of Asia, based in Singapore, he coordinates the development of the company’s investment and asset management activities in the region.
He also manages the development of investment platforms in Japan and has set up a local presence in other parts of the region which are important to AXA Real Esate’s strategy. He has contributed to the launch of Asian investment funds to develop its asset base in Asia on behalf of its clients.
With over 15 years in the investment industry, he has extensive experience in private equity and real estate and a deep knowledge of all the Asian markets. His expertise in deal sourcing and execution as well as fund launches have contributed widely to the company’s ambitions to become a major player in the Pan-Asian real estate investment industry.
In addition, Mr. Khoo has also been appointed as Co-Chairman of the EUCCK Real Estate Committee and will be coordinating its activities, seeking to give is wider exposure in Singapore and other Asian markets.
Speaking on this new role with the chamber, he noted that the Committee has already established itself as one of the premier platforms for Real Estate professionals in the region, having organized highly reputed international conferences and meetings. As Co-Chairman, he hopes to contribute towards expanding its activities and raising its profile even more.
Speaking on the priorities for AXA Real Estate, he noted that global growth remains a key priority and AXA Real Estate is currently expanding its presence in both the US and Asia, most recently with the launch of its US platform last year.
He also noted that the company signed an agreement with The Sumitomo Trust and Banking Co Ltd (STB), one of the largest trust banks in Japan, formalizing plans to jointly set up a new investment fund for Japanese real estate.
“Over the past three years, we have substantially expanded our operations across the Asia region, establishing the new Asian headquarters in Singapore, announcing a memorandum of understanding with China’s Ping An Trust to co-invest in developing residential projects in China and also the deal with STB.”
These developments were the next step in AXA Real Estate’s plans to offer a diversified range of Asian real estate opportunities to institutional investors, in complement to the firms established European capabilities, he said.
“We already had an existing team on ground in Japan, but we chose to tie up with Sumitomo as we feel that this tie up will greatly enhance our execution ability in Tokyo both from the aspect of deal sourcing and asset management.”
There is no doubt that investors are now recognising that the pace of growth in the Asian property market is likely to outpace that of both the US and Europe. As such, they are increasingly prepared to consider exposure to the region when building up a balanced global strategy, he added.
He said that in general there was a ‘three-tier’ approach emerging in terms of investors' attitude. One for countries like Japan, which as the most mature Asian market, offers investors core investment characteristics especially on good quality commercial assets. The next for ‘semi-developed’ markets like Korea, Singapore and Hong Kong, while the last for the emerging Asian markets like China and India.
The emerging markets are more opportunistic and therefore are more suited to those investors who are prepared to accept a slightly higher risk profile.
“Asia is becoming a strategic destination for the real-estate investor and we want to support our group and third party client efforts in diversification and creation of value,” he
In a separate interview, Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate, who was in Seoul to meet with potential investor partners noted that while Korea is an important market for the company, it is not an immediate priority.
“ We want to expand our investments in Asia, are considering Korea for medium term exposure. Although a very mature market, it is still dominated by domestic players. It is only recently that the foreign investors have started coming it. We look at it as a key investment market in the long term,” he said.
When the company invests in a new territory, they consider it very important to have local expertise. While in Europe they have setup their own local teams, in Asia, the strategy is to have both a local team and a local partner. For example the company has teamed up with a local partner in China.
As for the emerging BRICs, he noted that they have a huge potential, and each country has its own advantages, although Russia does not have the characteristics of other emerging markets and is energy driven. The outlook for China, India and Brazil is very positive.
“The only country where we have no strategy is South Africa, as it is a market of its own, and we have to be very cautious.”
Mr. Vaquier said the main challenges the company faces in new markets is to understand local characteristics and have a secure environment to do business.
“We need to be careful with volatility of markets, and have to be very careful with the business cycles. Getting a good local partner is important as also investing in real estate asset classes which are backed by growth model.” support case
With regard to the European economy which has been hit by the debt crisis in Ireland, Greece and Portugal, he said AXA is “cautiously positive” that the recovery will take place soon.
“ The worst is behind us, and many private companies are expanding again. The worries on the debt are not going to disappear overnight, and will take a few years. But it will definitely recover.”
While the citizens of many of the countries have been protesting the austerity measures that have been implemented in these countries, he noted that the combination of higher taxes and slower consumption is painful, but there are not much choices left.
“The governments have to take into account all factors. The people are critical not of the measures, but how it is being implemented,” he said.
Speaking on the impact of the Japanese tsunami on the company’s business, he noted that although it is too early to say, it will likely not have much of an impact. The disaster has shown that earthquake regulations have been effective in limiting the damage. While the economy may be effected in the short term, the reconstruction efforts will help the economy grow again.
Since AXA is involved in life insurance and not in property/causality insurance, there will be no impact on the parent company, he said.