As Hong Kong property prices retreat to reflect falling demand from top-paid earners, a new breed of value investors are being lured to town.

Duet, a London-based hedge fund and private equity investor that manages US$2 billion of assets, will launch a Hong Kong-based China Fund in the final quarter of the year. It plans to hunt for rich pickings in the mainland's troubled real estate sector.

Co-chairman Henry Gabay said Duet planned to raise US$400 million from pension funds and wealthy individuals.

South China Morning Post