Founded in 1981, Singapore's sovereign wealth fund, GIC is an early investor in private equity and property. According to Goh Kok Huat, president of real estate at GIC, the fund is underinvested in real estate.
Real estate currently makes up 7 per cent of its asset mix. It plans to raise this proportion to 9 to 13 per cent by looking at big transactions in deep and liquid markets in key gateway cities. Emerging markets will also be important for its long-term strategy, despite its short-term geopolitical risks.
GIC will also continue to partner global players, including private equity firms and other sovereign wealth funds, on bigger deals as competition for global assets heats up.
Low interest rates worldwide have made investing in the area ‘tougher and tougher’. Returns from investing in real estate are likely to be low in such an environment and prices are high in some top-tier global cities, such as London, Singapore and Hong Kong.
"It's always hard to say whether we are in bubble territory, but they are certainly aggressive," Goh said.
On world markets Goh said:
- Japanese real estate is attractive because of its strong tourism industry.
- India is a tough market but for investors who get in, there are "supernormal" profits to be made.
- Australia and New Zealand will continue to be key markets given their liquidity and depth.
- Europe will remain a tough market because of high prices and weak fundamentals.
- The U.S. market is recovering well and with its deep, transparent markets, it cannot be ignored.
In addition to its China’s portfolio, GIC owns almost 5% of the Hong Kong-traded shares of China Vanke Co., bought a building next to Tokyo Station last year and purchased Blackstone Group LP's 50% stake in London's Broadgate office complex in 2013.
Last year, GIC sealed a deal to buy office space in New York City's Time Warner Center with two partners, the Abu Dhabi Investment Authority and US real estate firm Related Companies, for US$1.3 billion.
Early this year, GIC teamed up with Global Logistic Properties to buy Blackstone Group's IndCor Properties Inc, one of the largest logistics platforms in the US, for US$8.1 billion.
In May 2015, it paired up with Canada Pension Plan Investment Board to buy the D-Cube Retail Mall in Seoul for US$263 million.
In September, GIC purchased a S$421.4 million stake in two housing projects in central Delhi in September.
One month later, GIC and Tishman Speyer said they would form a joint venture for Tishman Speyer's Waverock office development project in Hyderabad.
GIC doesn't disclose the size of its assets under management, but London-based Sovereign Wealth Center puts its total holdings at US$343 billion, making it the world's sixth-biggest sovereign wealth fund.
Source: Business Times