Since winning the 2008 Summer Olympics bid in 2001, Beijing has set out to transform itself from a smoggy, Third World city to a First World metropolis of the future. To that end, the government has put approximately $41 billion of public funds into infrastructure improvements and new athletic facilities, and has encouraged private investment in office, retail and hotel assets. The result, according to researchers and public administrators, is a city poised to compete with any major city in the world.

The number of private equity real estate funds pursuing opportunistic returns amid the fallout from the credit crunch continues to grow rapidly. In a recent position paper, fund of funds manager Clerestory Capital Partners argues that “equitable terms” for all investors is a principle worth defending.

As share prices fell nearly 20 percent in 2007 from their previously lofty levels, public REITs that own commercial properties saw total returns drop an average of 15.7 percent for the year. Likewise, values of securities backed by commercial mortgages fell fast as the credit crunch took hold during the second half of the year, with the devaluation only accelerating as bond yields further skyrocketed during 2008’s first quarter.