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. Last Updated: 07/27/2016

Singapore GIC Looks to Move into Russia

SINGAPORE -- The property arm of the Government Investment Corp of Singapore is looking to move into Russia and Turkey but is "extremely careful" in the London office market where prices have soared.

The head of GIC Real Estate also sees promise in the U.S. office sector, saying the market has strong fundamentals, and did not expect yields there to narrow further.

"Even though a lot of people say some of the Western markets are pricey, there are still opportunities there," GIC Real Estate President Seek Ngee Huat said Monday at a Real Estate Summit in Singapore.

Last week, GIC Real Estate paid $954 million to buy the London headquarters of U.S. investment bank Merrill Lynch -- a deal that comes three months after the $851.3 million acquisition of a stake in Britain's MetroCentre mall.

"We don't always have to look at conventional sectors," he said, adding that the state investor has invested in car dealerships and housing for students and senior citizens.

GIC Real Estate, which does not invest in Singapore, started 25 years ago with investments only in the United States but has since grown to become one of the world's 10 biggest property investors with a multi-billion dollar portfolio in 32 countries.

"As a global investor, we have to find our opportunities whether the markets go up or down around the world," Seek said.

Seek said rising interest rates were among the risks on the horizon for global property investors and the complex links between financial and property markets meant that real estate as a sector would not be insulated from financial market shocks.

"It's difficult to quantify what kind of risk has built up but the fear is that something is going to happen," Seek said.

He said GIC would have to be discerning in seeking long-term gains in its investments because the flood of institutional funds was raising "pressure" on global real estate, leading to rising asset prices and narrower yields.

Seek said GIC has also begun to "explore" Vietnam and was also looking to make significant investments in India, where it last week announced a joint venture with Mumbai-based property firm Runwal to build a $62 million mall.

"We're beginning in India. We're now looking at residential and retail [property] when opportunities arise, probably also at the office and logistics [sectors]," he said.

He did not say how much investment might flow to those countries but said it was part of its efforts to position itself to capitalize on growing wealth in Asia.

"The trend of wealth creation is shifting from the West to the East and if you are positioning your strategy over the long term, your strategy over the last 10 years would be different for the next 10 years," Seek said.

In particular, the housing markets in China, India, Thailand and Malaysia offered great potential, he added.

"Housing is a basic need. It's coming from such a low base in emerging markets where there's growing affluence and growing affordability," he said.

GIC's parent manages over $100 billion in Singapore's foreign exchange with investments in stocks, bonds and other assets.