Day 21 – AETOS Capital Asia (real estate)

“Real value in a changing world”

Today’s topic focused on real estate in China, both residential and commercial. The real estate investment firm, AETOS Capital Asia, shared their experiences with making real estate investments in China. They practice a focused laser-like strategy to find partnerships through joint ventures for high quality real estate projects. AETOS has experience and expertise to minimize risk for their investors and find projects that provide positive ROI. They focus heavily on governance and relationships. Two areas that have been consistently mentioned by all the companies we have visited. It is important to understand that ownership (I.e., leases that last 70 years) is very new to the Chinese population (past 10 years). Also, 70% of the Chinese hold no debt on their real estate purchases. One reason for this is there is no alternative forms of investment for most Chinese. Austerity measures in China have also had an impact on the real estate market.

To learn more about the variables that are influencing real estate growth and investment, Mr. Ng from Jones, Lang, and LaSalle shared some of the research his company has recently published – China50: Fifty Real Estate markets That Matter. He started his talk by asking the group. How many of us could name 10 cities in China, 30 cities, 50 cities? I quickly am reminded of how little I know about China.

In the afternoon, we visited one of the projects that AETOS invested. This is a residential community that is part of a much larger development in South Chengdu (this is also the area where the national government is relocating in Chengdu). We visited the high end 44 floor condo (taking liberty with this term) development. There is currently 80% occupancy and it has been open for less than a year. The starting price is about $1 million USD. One interesting takeaway is there is no oven in the model kitchen. Here are some pictures …

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After this visit, we headed off to another development – Luxe Hills Community. It was very similar to Kingsmill. While touring the facility, we happen to run into an expat Kurt Bozenhardt with Chevron (a graduate of University of Alabama). He and his wife were very friendly and gave us an impromptu description of their lives in Chengdu. Sean found his profile on Linked In — what an interesting person. He provided us his business card and offered to provide us an opportunity to visit him and Chevron in Chengdu.

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For out last evening in Chengdu, Trey treated us all at one of his favorite Hotpot restaurants. Earlier in the week, I had the spicy Hotpot, this night I stuck with the more mild version. If my mom was here, she would not believe the food I have eaten. For me pig tendons or pig intestines are probably the most out there. Sean on the other hand has tried everything and anything!!

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