DEALTALK-UK property dealmakers chase Asia prospects

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* More UK-based property dealmakers likely to relocate

* M&A, IPOs, advisory opportunities seen in Asia over UK

* Maturing of Asia property mkt supported by economic growth

By Andrew Macdonald and Sinead Cruise

LONDON, Sept 3 (Reuters) - Several key dealmakers in the UK commercial property market are seriously mulling a move to the fast-maturing Asia market, citing money-making opportunities in mergers, acquisitions, flotations and advisory work.

Investment bankers, advisors, brokers and analysts told Reuters they expected a three-year dealmaking dearth in the UK property market to linger for at least as long as that again, hurting their ability to take part in lucrative deals. "Of my investment banking peers, many of them are moving to Asia-Pacific. That just says it all to me," Adrian Benedict, an investment director at Fidelity International, said on Friday.

"They're saying, 'right then, we're not seeing much in the way of M&A and IPO opportunities in the UK or European real estate sector, we'll spend a while in Asia, say Hong Kong or Singapore. That's where things are happening right now'."

This geographic shift in focus underlines recent data showing Asia is expected to experience a surge in initial public offerings, while its real estate investment trust (REIT) markets are bullish and opportunities still exist for direct investment.

An analyst and a broker, both UK-based, said they saw their immediate futures in one of the main Asian centres and plan to hawk their talents to institutions, companies or private clients there.

The analyst holds ambitions to join contemporaries in Asia and would work in Shanghai, Bangkok or Hong Kong. The broker plans to move to Singapore or Tokyo and said he is actively seeking opportunities there.

RISK AND REWARD

"My sentiment is quite simple. Asia represents structural growth, versus structural stagnation and relative decline in western Europe," the analyst said, on condition on anonymity.

"Asia offers both established property exposure as well as proper emerging market risk and reward attractions," he said.

All of this is in part linked to a gloomy outlook for economic growth in the UK compared with Asia, which, while seen moderating in 2010 and 2011, is expected to be more favourable for the property sector. [ID:nSGE66C079] [ID:nSLAAJE6A2]

That is reflected in property consultancy DTZ's Asia-Pacific Fair Value index for the second-quarter of 2010, which identified several direct investment opportunities in the region.

Prime offices were undervalued by 18 percent in Hong Kong and 14 percent in Tokyo, DTZ said; retail was undervalued by 9 percent in Singapore and 8 percent in Hong Kong; while industrial was undervalued by 11 percent in Singapore and Melbourne.

Law firm Eversheds said Hong Kong is preparing for a boom in IPOs with a combined $6 billion worth of deals already targeted for September, excluding the estimated $15 billion flotation of AIA Group, a unit of American International Group (AIG.N), expected in October. [ID:nN02210304]

Eversheds linked the expected IPO boom to China's economic growth and the resultant flow of companies seeking to tap equity markets, the strong investor base in Asia and the promotion of Hong Kong as an investment hub by its bourse and government.

Separately, data from global property services company CBRE (CBG.N) shows Asian REIT market capitalisations rose by a quarter to total $69 billion in the first half of 2010. [ID:nTOE68006F]

"If you're an investment banker ... how would you get to the decision makers who are actually going to give you some work?" said Craig Hughes, a partner at Ernst & Young and its head of property for the UK and Ireland. "Can you do that from London, or do you need to be in Seoul or Beijing?" (Editing by David Holmes)