US asset manager Nuveen, which manages US$1.2 trillion in client assets, is pushing into Asia with its flagship real estate strategy, identifying the rising demand for alts and familiarity with real estate within Asia as strong tailwinds.
“From the US, the international expansion has been very successful over the last five years. Historically, wealth clients in the US, represent a very significant part of our AUM, in addition to the money that we manage on behalf of our parent firm TIAA,” said Chris Lau, managing director within the Global Client Group and head of private wealth for Asia ex-Japan, Nuveen.
Chris Lau, Nuveen
“The number of clients that are invested into alternatives today far exceeds ten years ago but it is still picking up. This year so far, things leant toward income,” he told Asian Private Banker.
Lau leads strategic initiatives with key private wealth partners including private banks, wealth management platforms and family offices across the region, and noted: “The firm is quite excited to be partnering with a global private bank in due course, with a strong focus on Asia.”
Before joining Nuveen in 2023, Lau was head of capital development for Asia Pacific at real estate asset management platform DLE Group. Prior to that, he worked for UBS across its wealth management and investment bank businesses in Hong Kong and Sydney. Nuveen currently has 750 people across 30 global offices.
Lau succeeded Henry Chui, who is now with Swiss-based Partners Group, which recently opened its Hong Kong office in the summer and eyes regional expansion.
Stick with star product
Lau noted that interest in alternatives has been towards income and diversification. “With the Fed having initiated its easing cycle and projecting further rate cuts over the next two years, the interest rate environment should become a tailwind for the asset class. We believe both stabilising fundamentals and transaction market pricing point to a broad recovery,” according to a recent report by Nuveen.
“Portfolio allocations to private real estate may be funded from either equity or fixed income, depending on the investor’s objectives. With income a larger component of total return than capital appreciation in private real estate, sourcing a portfolio allocation from bonds can be a way to seek improved risk-adjusted returns, while also improving the tax efficiency of the income,” the report said.
“Clients’ interest, asset diversification and industry-wide education have made alternatives so much more accessible,” Lau believes.
“Our key flagship within our real estate business is Global Cities strategy. The strategy has been running for five plus years [and] has a significant flow growth from our wealth and institutional clients, which will stay as a significant and core part of our business,” he continued.
Familiarity with real estate helps
While it has not always been as easy for global alternatives managers in Asia, which has a much lower penetration ratio for alternative investments compared to the US and Europe, Lau believes Asian investors’ preference for real estate assets in their personal lives might be an advantage for future business growth.
“For bringing real estate strategies to Asia-based clients, I think there definitely is a familiarity. The number of private wealth investors that have been successful investing and operating real estate in their own day-to-day business is very high, and so therefore the familiarity around real estate will translate to their alternatives investing as well,” he told APB.
“In terms of challenges when onboarding a new strategy to a new partner, investing in real estate has been around the macro-economic environment, or real estate market in general. But our approach has been different,” he said.
“For example, our Global Cities strategy has a 30% allocation to industrial, a 24% allocation to healthcare real estate, and another 12% allocation to grocery-anchored retail, which provides diversification for investors. [Global Cities has also operated with lower leverage, currently at 20%]. In terms of liquidity, it is an open-ended alternative structure, and we have been able to meet every redemption request in full and on time,” Lau said.
