Prices of homes in Hong Kong Island's Peak, Mid-Levels and South Side residential areas have gained by more than 80 percent since reaching a 12-year low in 2003, according to indexes compiled by Colliers International in Hong Kong after 10 straight quarters of gains. Meanwhile, land prices in Japan's three biggest cities of Tokyo, Osaka and Nagoya rose in 2005 for the first time in 16 years, according to government figures. In China, property prices in the southern city of Shenzhen in Guangdong province rose 12.9 percent in August from a year earlier while Beijing's prices jumped 9.9 percent. Urbanization Hongkong Land Holdings Ltd., one of the biggest landlords in Hong Kong's financial hub, and Mitsui Fudosan Co., Japan's largest developer, were among the fund's 10 largest holdings as of Aug. 31. Hongkong Land shares have rallied 17 percent this year, while Mitsui Fudosan, which generated about a third of its 2006 revenue from leasing office space, rose 21 percent. ``Structurally, we're very positive on property,'' said Jorry Noeddekaer, who helps manage $1 billion in Asian equities at New Star Asset Management in London. He owns property stocks including Singapore's CapitaLand Ltd., Southeast Asia's biggest real-estate developer. ``Urbanization will be a big driver.'' Commercial property developers are also benefiting from Asia's economic expansion. Average rents in Hong Kong surged 37 percent in the six months to June, leading gains in Asia, according to CB Richard Ellis, the world's largest commercial real estate brokerage. During that period, rents in Tokyo increased 12 percent, while Singapore posted an increase of 15 percent. Economy First The Henderson fund is also invested in Mitsubishi Estate Co. and Sumitomo Realty & Development Co., two of Japan's biggest property developers. Shares of Mitsubishi Estate have climbed 17 percent this year, while Sumitomo Realty has surged 49 percent. Reilly, who graduated with a Master's degree in economics from Manchester University in 1991, started covering property in 1992 at London-based Investment Property Databank, which provides portfolio analysis services to institutions. He then worked for the asset management arm of AMP Ltd., Australia's largest life insurer, where he invested in physical property. He joined Henderson's property equities investment team in 1999 after AMP bought the U.K. money manager. The fund manager, who owns properties in Asia and Europe, also helped set up the Asian Public Real Estate Association that promoted investment in the region's property industry in 2005. He declined to elaborate on his personal investments. Reilly constructs his portfolio by first assessing the global economic outlook and then determining which segments of the property market will perform best in that environment. Shares of REITs are likely to be the best bets in the next 12 months, he said. ``Asian markets are very interesting at the moment,'' Reilly said. ``There are lots of themes to play with and there's good growth in the mid- to long-term.''