JPMorgan plans Asia property spree

By Dominic Whiting

HONG KONG (Reuters) - JPMorgan plans to invest more than $1 billion (511 million pounds) in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and rival investors recoil from property markets.

The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to U.S. subprime mortgage investments, is using its special opportunities group to finance Asian property firms and their projects.

"It's a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet," the group's Asia real estate head, Bryan Southergill, told Reuters in an interview.

Many Chinese and Indian developers are struggling to complete ambitious projects because local banks have clamped down on lending to the construction industry and a stock market slump has closed off equity raising through initial public offerings.

Foreign investors are also shying away from markets where risks, as well as returns, are traditionally high. But because of a shortage of funds, developers are starting to offer plum deals.

"Last year many private equity players were clamouring for exposure in India and China but it was hard to get in," Southergill said.

"Now, sellers' expectations have come down and what they're asking for is much more reasonable, but the private equity and hedge funds have really pulled back and are more cautious."

In China, the lending clampdown was inspired by a government bent on cooling a market where average home prices have doubled since 2002 and high-end apartments prices have risen much more.  Continued...