Singapore Inc. goes on buying spree

Singapore Inc. goes on buying spree

Bernice Han, Agence France-Presse/Singapore

Got any prime property to sell for a few hundred million dollars in a major world capital ?

Try offering it to Singapore, a land-scarce but cash-rich country emerging as a global property titan as it snaps up everything from serviced apartments in Japan to malls in Britain as part of a long-term investment strategy.

The acquisitions are driven by the Government of Singapore Investment Corp. (GIC), custodian of the financially savvy city- state's foreign reserves of over US$100 billion.

In its latest purchase, GIC joined hands with investment bank Morgan Stanley to buy Sydney's landmark Chifley Tower and Plaza -- overlooking the famous harbor and iconic Opera House -- and the Royal Pines Resort in Australia's Gold Coast.

The price was not disclosed but analysts quoted by the Australian Financial Review speculated that the deal could be worth almost $600 million.

"We believe that the underlying market fundamentals will favor rental growth," said Seek Ngee Huat, president of GIC Real Estate, the group's property arm.

GIC spokesmen had no immediately reply to queries about the size of its global property portfolio, but in the past 12 months alone, GIC and partners have announced more than $4.0 billion worth of acquisitions.

This total excludes purchases whose values were not announced. GIC, whose financial disclosures can affect the value of the Singapore dollar, does not make its accounts book public.

Apart from real estate, GIC also places its funds in equities, fixed income, money market instruments and special investments. It describes itself as one of the world's largest fund management companies.

Lee Ek Tieng, GIC's group managing director, said on the agency's website that its mission is to "achieve good long-term returns on state assets placed under our charge by investing internationally, with due regard to risk."

Analysts said a glance at the property purchases reveals a pattern.

"Most of the properties are in major international cities in developed countries and of prime quality," said Chua Hak Bin, senior regional economist at DBS Bank in Singapore.

"At the same time these are relatively low risk and they provide a steady cash flow stream and dividends... on that basis, it is quite a sensible strategy," he said.

The GIC is also taking the right approach by investing the republic's reserves in a diversified portfolio, Chua said.

"The point is you have these huge reserves managed by the government... at the end of the day do you want to restrict these reserves to just buying U.S. treasuries?" Chua said.

"I think the answer is no... this is just one part of their portfolio and I think it's a sensible one," he said.

Set up in 1981, GIC is one two government investment agencies and its chairman is the city-state's founding father, Lee Kuan Yew.

The other investment arm, Temasek Holdings, manages a corporate portfolio worth over $50 billion including such heavyweight as Singapore Airlines, Singapore Telecommunications and major foreign companies.

GIC has offices in New York, San Francisco, London, Beijing and Tokyo.

Its fresh Australian acquisition, Chifley Tower and Plaza, comprises 40 levels of prime office space and retail shops in Sydney's business district.

The Royal Pines Resort is located on Queensland's famed Gold Coast. It is one of the largest developments of its type in Australia, comprising a 330-room hotel, convention facilities, a 27-hole golf course that regularly hosts international tournaments and other leisure facilities.

In March, GIC bought three serviced apartments located in upmarket Tokyo residential areas for more than $111 million.

During the same month, it also paid $578 million for a 17.5 percent stake in a British shopping mall and entered into a $637- million venture with Britain's largest student landlord, the UNITE Group, to build and operate hostels in the country.

Some of GIC's other assets are the AT and T Corporate Center in Chicago, the Shiodome City Center in Tokyo and the Seoul Finance Center in the South Korean capital.