CapitaLand, South-east Asia's biggest developer by sales, announced yesterday that it has set up a US$1 billion fund to invest in properties in some Chinese cities.

Keppel Land's property fund management unit, Alpha Investment Partners, meanwhile, has raised US$1.2 billion from 15 institutional investors for a fund focused on Singapore, China, India, South Korea and other regional markets.

A statement yesterday said the amount Keppel Land has raised exceeded the company's target of US$1 billion.

CapitaLand's Raffles City China Fund - as the new entity is known - has its initial investments already lined up. It will own CapitaLand's 55.9 per cent stake in the Raffles City development in Shanghai and buy the three Raffles City projects being developed in Beijing, Chengdu and Hangzhou.

These assets are worth about US$2 billion, and the fund intends to finance this with a mixture of equities and borrowings.

CapitaLand will hold 50 per cent of the fund, while a handful of 'leading financial institutions and pension funds from Asia, Europe and North America' will hold the rest, according to a company statement.

The fund has an option of closing in December and may grow to as much as US$1.3 billion.

China's residential property market has softened amid the government's efforts to curb supply and demand. CapitaLand, however, is tapping into the sector's long-term prospects.

The Raffles City project in Shanghai is one of the few integrated retail and commercial developments in China, so the fund has assets offering value to investors, said Kim Eng analyst Wilson Liew.

Mr Lim Ming Yan, the chief executive of CapitaLand China, said: 'As China's urbanisation gathers pace and its middle class grows in tandem with the improving economy, demand for integrated developments will continue to rise.'

Keppel Land's Alpha Asia Macro Trends Fund, meanwhile, will target real estate in Singapore, Japan, Taiwan, South Korea, Hong Kong, China, India and Vietnam.

It brings the total number of funds under Alpha to five, which will be managing gross assets of about $7 billion.

Investors in Alpha's funds include three of the largest Dutch pension plans - Stichting Pensioenfonds ABP, PGGM and MN Services - as well as global banks UBS and Deutsche Bank.

graceng@sph.com.sg