SWF Weekly News Roundup — Funds Eye Global Real Estate

July 17, 2015 by Loch Adamson

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Sovereign wealth funds sealed real estate deals in Brazil, India and Europe this week, while Singapore passed legislation that may see state investor Temasek contribute more to the government budget.

BRICs and Mortar

State investors are increasingly targeting emerging markets-real estate as they seek to profit from the emergence of newly-affluent middle class consumers in several countries.

This week Singapore’s $342 billion sovereign wealth fund GIC announced it had agreed to buy a 35 percent stake in Via Parque Shopping, a Rio de Janeiro mall, from Brazilian developer Aliansce Shopping Centers. GIC said it will pay 132.43 million Brazilian reals ($41.89 million) for the property. The seller said the price may rise to BRL157.5 million depending on the mall’s financial performance.

The deal is GIC’s second in the Brazilian retail property sector in the past year. In October 2014 GIC teamed up with the Canada Pension Plan Investment Board (CPPIB) to buy a stake in a São Paulo mall from Alliansce and General Shopping Brasil, another local developer.

GIC is also continuing to target Indian real estate. The fund is in talks with Gurgaon-based developer DLF to buy a stake in a project to develop 3,000 high-end apartments in New Delhi, according to local news reports. The project will cost around 30 billion rupees ($473 million) and GIC is said to be eyeing a 49 percent stake. GIC has made several investments in Indian property in 2015, including both greenfield and mature projects. In June GIC purchased a plot of land in Chennai for INR5.5 billion ($86.3 million) via Brigade Properties, its joint venture with Bangalore-based developer Brigade Group.

European Property Deals

Developed market commercial property is drawing interest from sovereign funds, too. This week the $746.7 billion China Investment Corp. (CIC) sealed a €1.3 billion ($1.5 billion) deal for a portfolio of 10 shopping malls in France and Germany. CIC bought the properties from the European unit of Los Angeles-based real estate firm CBRE Global Investors, and reportedly beat competition from Gingko Tree Investments, the real estate unit of its Chinese peer, the State Administration of Foreign Exchange, as well as French-Dutch commercial property giants Unibail-Rodamco and Wereldhave.

The $304 billion Qatar Investment Authority (QIA) formed a 50-50 joint venture with The Ascott, a unit of Singapore-based real estate investor CapitaLand, to invest in serviced residences in Western Europe and East Asia. QIA and Ascott will each contribute an initial $600 million to the venture, which will target development and redevelopment projects, as well as mature properties.

Temasek Budget Contribution Altered

Singapore has passed legislation that will bring $194 billion state investor Temasek Holdings into its Net Investment Returns (NIR) budgetary framework for the first time. The new law will enable the government to spend on the basis of Temasek's expected annual performance. Under the revised framework, the government will be able to spend up to 50 percent of the expected returns on the net assets managed by Temasek, GIC and the Monetary Authority of Singapore, the city state's central bank, each year. Temasek has said its investment strategy will not be affected by its incorporation into the NIR framework. 

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