Overseas real estate a hit with local investors in 2017

The New York city skyline as seen from the Hudson River. Investors based in Singapore sank US$9.5 billion (S$12.5 billion) into US real estate last year, compared with the combined US$7.3 billion from China and Hong Kong.
The New York city skyline as seen from the Hudson River. Investors based in Singapore sank US$9.5 billion (S$12.5 billion) into US real estate last year, compared with the combined US$7.3 billion from China and Hong Kong.PHOTO: GETTY IMAGES

Record $37.2b invested, making Singapore the 'fifth-largest source of capital globally'

Singapore investors large and small ploughed record amounts of money into real estate overseas last year.

Around US$28.4 billion (S$37.2 billion) was invested - up 40 per cent on the US$20.4 billion spent in 2016. It also upended the old record of US$27.6 billion set in 2015.

Sovereign wealth fund GIC had a hand in three of the largest outbound deals last year, although buyers came from real estate investment trusts, developers, private wealth, and unlisted funds as well.

The huge spending made Singapore the fifth-largest source of capital in 2017 globally, after the United States, Hong Kong, China and France - one spot higher than in 2016, said research firm Real Capital Analytics, which compiled the data.

Singapore has also emerged as the largest Asian investor in the US, surpassing the combined total from Chinese and Hong Kong firms. Investors based here sank US$9.5 billion into US real estate last year, compared with the combined US$7.3 billion from China and Hong Kong.

And while foreign investment has tended to focus on trophy office, hotel and residential properties in central business districts, Singapore-based investors have preferred to focus on industrial, suburban multi-family and more niche asset classes such as student housing and data centres.

Singapore-based capital is also entering secondary and tertiary US markets, even though the major metropolitan areas attract the bulk of investment. Mapletree Investments, for example, bought an office building in central Minneapolis for US$258.5 million.

Singapore has also emerged as the largest Asian investor in the US, surpassing the combined total from Chinese and Hong Kong firms.

The largest Singaporean deal last year was GIC's acquisition, through its stake in a Greystar fund, of Monogram Residential Trust for US$4.4 billion. GIC, which was also Singapore's largest outbound investor last year, seemed to have shifted its strategy in the US from logistics to residential properties. It also started this year with a US$247.5 million investment in multi-family properties in the US.

The second-largest deal last year was GIC's acquisition, with the Canada Pension Plan Investment Board and The Scion Group, of a portfolio of 24 student accommodation assets in the US for US$1.1 billion.

This was followed by GIC's acquisition of a 95 per cent stake in 60 Wall Street, an office building, for US$988 million.

Then came Mapletree Investments' and Mapletree Industrial Trust's purchase of 14 data centres in the US for US$750 million.

Mr Priyaranjan Kumar, Cushman & Wakefield's regional executive director of capital markets in the Asia-Pacific region, said Singapore has limited assets to which capital can be deployed.

"Hence, both sovereign and non-state companies have been pioneers in global real estate investments," he added.

Singapore investments remained concentrated in the Asia-Pacific region, which accounted for more than 40 per cent of the exposure last year. China was the fourth-largest destination.

Some European markets are also gaining traction for local investors. German real estate, for instance, has emerged to become the "poster child" in the post-Brexit world.

A version of this article appeared in the print edition of The Straits Times on January 30, 2018, with the headline 'Overseas real estate a hit with local investors in 2017'. Print Edition | Subscribe