Singapore’s GIC appears set to continue pushing into Australian real estate and develop more joint ventures and local partnerships in the country with the opening of its Sydney office next year, industry experts told AsianInvestor.
The sovereign wealth fund wrote in a statement on Monday (May 31) that it plans to open its first Australian office in 2022 to capture investment opportunities in the country.
“GIC will continue to actively source for opportunities across various sectors and partner with businesses with strong long-term growth prospects. This planned office opening will further capitalise on GIC’s private market capabilities to generate good, risk-adjusted returns for the overall portfolio,” the statement wrote.
The state fund's opening of an office in Australia tallies with both the latter's strong property market and GIC's track record of investing there, analysts told AsianInvestor.
“Data from Global SWF suggests that Australia has been a popular destination for sovereign wealth fund investment flows, and much of that has been into private assets including real estate," Gary Smith, managing director of research firm Sovereign Focus told AsianInvestor.
He added that GIC is likely looking to work with partners with local knowledge, "simply because this makes sense when investing in private markets.”
"Real estate is an asset class that demands local representation," he said.
Other observers shared similar observations. “The next focus for GIC will be real assets – that is, infrastructure debt and equity – farmland and agricultural positions,” said a senior executive at a global investment firm in Singapore.
“GIC have been long term investors in Australia across real estate equity positions and have also been developing their real estate debt program. They have very long-term positions in retail in key markets, so the office opening makes great sense,” he added.
However, in the statement from the sovereign wealth fund, Lim Chow Kiat, chief executive of GIC, alluded to the real estate push and a desire to grow local partnerships.
“We are already very pleased with our existing portfolio in Australia, especially in real estate. We believe the new office will better support the management of our existing assets and increase interaction with local partners so we can generate more value-add together,” he said in the statement.
As of May 31 2021, the sovereign walth fund had invested $2.9 billion in Australia. Its total investment since 2011 stands at $8.4 billion, according to US-based consultancy Global SWF.
GIC already holds a sizeable logistics and real estate portfolio which include ownership of premium buildings such as the prominent skyscraper Chifley Tower in Sydney, which GIC sold a 50% stake to Charter Hall for A$900 million ($696 million) in 2019, and retail centre Emporium in Melbourne.
It also owns 80% of a A$1 billion ($776 million) logistics joint venture with property development ESR, and also holds 49% in an open-ended unlisted trust with real estate investment platform Dexus.
AUSTRALIAN OFFICE OPENINGS
The office opening follows similar earlier moves by other global asset owners, Diego Lopez, managing director at Global SWF told AsianInvestor.
“GIC will follow four Canadian funds, namely Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board (CPP Investments), Ontario Municipal Employees Retirement System (Omers) and OPSEU Pension Trust (OPTrust), who opened their Sydney offices some time back,” he said.
Plus, more could follow.
“As we anticipated in our annual report released on January 1, we expect a number of global investors to open offices in Australia next," Lopez added. "This is just logic, as they keep increasing their allocation to alternatives assets, and infrastructure in particular, and there is a lot of interest and investment in Australian infrastructure.”
Foreign state-owned investors have deployed approximately $35 billion in capital to Australia since 2016, mostly in real assets with a heavy emphasis on infrastructure and logistics real estate, Global SWF data found. Annual investment stood highest in 2019, at $4.7 billion, only to fall by around 30% in 2020 as a result of the global Covid-19 pandemic.
The Canadian pension funds have typically staffed their offices with just under a dozen people. CPP Investments, Omers and OPTrust have a headcount of 10 each in their Australia offices, while CDPQ is the largest, with 13.
GIC's new Sydney office will mark its 10th outside of Singapore. It currently has teams in Beijing, London, Mumbai, New York, San Francisco, Sao Paulo, Seoul, Shanghai and Tokyo and investments in more than 40 countries around the world.
Lopez highlighted that GIC already has more overseas offices than any other global asset owner, with the exception of fellow Singaporean state investor Temasek (which counts 12 offices across eight countries).
“[GIC are] very well covered throughout Asia and Oceania, and so are they in the Americas and Europe. So, the following outpost might be in Africa if they decide to start tackling large opportunities in the continent,” he said.