As one of the few truly global real estate investors, the Government of Singapore Investment Corporation’s (GIC) Real Estate division has the ability to shape the future. It is actively invested in most of the major cities of the world. As an investor, builder and developer, it is working with local partners on important office and leisure developments, as well as major housing projects.
Among its landmark assets are the AT&T Corporate Centre in Chicago, the Shiodome City Centre in Tokyo, IBM’s imposing headquarters in Madrid and the Seoul Finance Centre in Korea. It has recently completed building a top-class office tower, the Asia Centre, in Pudong, Shanghai. The 70,000m2 development was over 60% leased at completion.
The exact size of GIC’s real estate portfolio is unknown. GIC’s official line is, and has been for a number of years, that its investments total over $100bn (e82.1bn). The real figure is almost certainly several hundred billion dollars more than that. What we do know is that GIC Real Estate has more than 120 very large investments in around 30 countries. Its remit is totally international and it manages its own funds, unlike most institutional real estate investors, who largely rely on external managers.
When GIC began investing in overseas real estate, it was heavily biased towards the US. In fact, the headquarters of the real estate division was located in San Francisco, until it was brought back to Singapore in the early 1990s. Nowadays, GIC Real Estate, which became a stand-alone organisation in 1999, is still increasing its global diversification, recently instigating its first investments in Latin America, through a partnership arrangement in Mexico.
GIC Real Estate’s president, Dr Seek Ngee Huat, is a highly respected figure in the international capital markets. Prior to joining GIC in 1996, he was a senior partner with Jones Lang LaSalle in Sydney for 13 years. He is also a past board director of the Pension Real Estate Association in North America.
Seek is enthusiastic about the new opportunities opening up for GIC Real Estate: “We are now investing in a much wider spectrum of real estate related assets. This partly reflects the growing sophistication of the real estate investment industry, and new investment opportunities in markets once considered difficult to enter.”
GIC takes a broad and flexible attitude to what it can do. “We invest in every class and sub-class of real estate and different types of vehicle. We also invest directly (one recent purchase was the Chifley Tower in Sydney’s CBD). We work with partners in joint ventures and we use REITS and invest in property companies. We also invest in debt, mostly mezzanine and mostly in North America.”
The challenge, according to Seek, is how to manage all of these different activities from a base in Singapore. He and his staff achieve this by emphasising team effort and working hard to ensure local expertise is maximised.
Seek says: “To overcome cultural barriers and the tyranny of distance, we have set up cross-border functional teams for staff to work together on issues. They are encouraged to draw upon each other’s sphere of experience and expertise in different parts of the world.”
Another key factor is the strategy of concentrating on developed markets: Seek says: “We only have limited resources, so we focus our attention where we think we can get better outcomes. We are essentially core investors, though we do have non-core products. We aim at the gateway cities, so that naturally excludes many of the emerging countries.”
And because GIC Real Estate has little over 100 staff around the world (which, given the approximate size of the investment programme, is skeletal) most of GIC Real Estate’s staff are given the opportunity to participate in the entire investment process.
“They have the opportunity to deal with a variety of product types and large lot sizes, which is experience they would not get anywhere else. Our young professionals are also given opportunities to work with counter-parties, which include some of the largest property players in their respective markets. They are therefore able to develop and mature quickly to become competent, well-rounded investment professionals.”
GIC Real Estate is able to make a success of its large investments overseas on the strength of its partnerships. Seek says: “One thing we have learned is that we cannot do everything ourselves. We really have to work with good local long-term partners. My advice to any global investor is to choose your partner carefully and try to stick to your vows.”
He adds that when partnerships are being put together: “One of the most important considerations is that there is alignment, not just of interests, but objectives. There has to be some demonstrable synergy there.
“What we bring to the table is more than just the capital. Our partners want us to bring a global perspective. They are more than happy to learn through us and for us to help them avoid problems in construction and costing. Our strict business culture and ethics also assist in the due diligence processes.”
An example of a strong partnership is GIC’s work with Prologis: “We began investing with them in Europe and we were instrumental in bringing them to Asia. We have an excellent partnership with them in Japan, an 80/20 venture where we have invested over $1bn so far.”

In the past few years, GIC’s emphasis has been on Asia “because we saw it coming off a low base”, says Seek. “The change in markets such as Korea and Malaysia has really been substantial in the last 10 years. One of the most interesting sectors is residential, especially in countries such as China and India, Malaysia and Indonesia. We have been quite active in what we call residential platforms, with highly reputable partners building apartments for sale.”
As far as funds are concerned, GIC is naturally selective and only invests in funds that will complement its other vehicles. For example, where lot sizes tend to be small, as in industrial property, or where GIC Real Estate doesn’t want to be involved in the actual operations, an area like hospitality. Having said that, GIC has three 100% owned hotels in Australia, but outsources the asset management in each case.
How does GIC Real Estate maintain the challenge for fund managers that it appoints? “The managers are aware that they need to perform for us to invest more funds with them. The question we have to consider most often is who to invest with in a particular sector. There are many other funds competing, so when we are looking to invest a further amount in that market segment, we will consider our existing managers as well as some new ones. And we will only work with managers who have low fees.
Overall, GIC Real Estate’s asset allocation is unlikely to change much in the short term. Seek says he would actually like to be able to buy more in the North America, but agrees with Michael McCook of CalPERS that North America is currently over-valued. In Europe, Seek observes that parts of Europe have recovered well and that GIC may invest more into central Europe. At a country level, GIC uses hurdle rates to help decide whether to buy, sell or hold a particular property. Typically these hurdles reflect the long-term bond rates in the market with an appropriate risk premium for real estate investments.
What does Seek consider are the keys to success as a global real estate investor? “The challenge for any investment professional is to seek out deals that outperform the benchmark. This requires strong analytical abilities to dissect the investment as well as the street-smartness to consummate the deal. To succeed, the real estate investment professional must be prepared to work the market, to network and to build relationships. When negotiating for the best terms, he or she must know how far to push the counter-party and when to leave enough on the table to keep the deal alive. It is much more than just working on a spreadsheet.”