GIC looking to buy more real estate assets

GIC, which manages more than US$100 billion (S$141 billion) of Singapore's reserves, is "underinvested" in property and interested in transactions of scale even as it faces an increasingly difficult investment environment.

GIC has about 7 per cent of assets in real estate, while it can invest 9 per cent to 13 per cent, GIC Real Estate president Goh Kok Huat said in his keynote speech at a conference organised by the Asia Pacific Real Estate Association yesterday.

Given its size, GIC is focusing on larger, deeper markets and "gateway cities", he said. "The Brics (Brazil, Russia, India, China, South Africa), plus Indonesia and Turkey, will become the single largest contributing bloc to GDP globally. Now, therefore, if your sights are set on the long term, the emerging market must be where it ought to be and you must pay attention to emerging markets. In the short term, we must deal with volatility in the emerging market as global macro forces shift as the US dollar strengthens."

But this does not mean that it will put money in every investment that comes calling. "We would like to put up more money across the globe, but it really depends on whether we see those transactions that are interesting," Mr Goh said.

"We are a disciplined investor. If we do not see transactions that are at a price point which we think is a great investment which would give us good stable long-term returns, we do not have the compulsion to push money out the door. "

The London-based Sovereign Wealth Centre puts GIC's total holdings at US$343 billion, making it the world's sixth-biggest sovereign wealth fund.

GIC has been adding to its real estate holdings, buying a building next to Tokyo Station last year in a bet on rising property values in Japan's capital, Bloomberg reported. It also purchased Blackstone Group's 50 per cent stake in London's Broadgate office complex in 2013 and was part of a group that acquired the headquarters space of Time Warner in New York City for US$1.3 billion.

However, Mr Goh also acknowledged that the investing environment is increasingly competitive.

"The environment has changed dramatically (compared to when GIC was first established). These days, there are many more (sovereign wealth funds)."

The use of technology and data can give GIC a possible advantage. Mr Goh said: "We also think about how we can become better at what we do, not just by thinking whether we can do larger transactions, and part of our effort is how we can use technology and data to be a real competitive edge for us in real estate."

And to improve returns and beat the benchmark, GIC has put a " focus on key markets that are deep, where the transactions are a lot more, because then we can get the local team to be experts in those markets".

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A version of this article appeared in the print edition of The Straits Times on November 26, 2015, with the headline 'GIC looking to buy more real estate assets'. Print Edition | Subscribe