Singapore’s GIC bets big on online transition, buys into warehouses

Singapore’s sovereign wealth fund has emerged as one of the biggest commercial real estate investors of the coronavirus crisis.

GIC already has a big presence in logistics via a tie up with Dexus and owns traditional office buildings, including half of Sydney’s Chifley Tower and Plaza. Picture: Hollie Adams

Singapore’s sovereign wealth fund has emerged as one of the biggest commercial real estate investors of the coronavirus crisis and is doubling down on its bet on Australia’s shift to ­e-commerce.

GIC will take its commitment in the logistics-focused commercial property fund, run by Hong Kong-based ESR, to about $480m, positioning it to undertake more projects in the booming warehouse sector.

The move follows Singapore’s GIC already spending billions of dollars in Australia during the depths of the COVID pandemic, buying offices, warehouses and service stations.

Under the latest deal, GIC bought a further 35 per cent interest in ESR Australia Logistics Partnership, giving it an 80 per cent stake.

It had already tipped $400m into another ESR fund in June that will develop and hold a separate pool of warehouses in Sydney, Melbourne and Brisbane.

The fresh commitment indicates Singapore Inc. is still scouring the local market for properties to buy and develop, particularly those that are relatively unaffected by, or even benefiting from, the pandemic.

Industrial property is running hot and in the past six months investors have raised more than $US7bn ($10bn) targeting Asia Pacific logistics assets, according to JLL.

The surge in online shopping – already a major driver for warehouse investment – has driven demand for assets.

“The pandemic will accelerate trends already in play across the sector, such as increased internet penetration rates, expansion of online grocery, omnichannel retailing, and the integration of technology into logistics and warehousing,” JLL director, regional research, Peter Guevarra said.

GIC’s real estate unit is also pushing into new areas. This year it teamed with local fund manager Charter Hall to take interest in the $1.4bn Ampol service station portfolio and also backed Dexus when it bought a half interest in Melbourne’s $1.3bn Rialto complex in April.

The investment surge indicates the Singaporean group’s belief in the recovery of the Australian economy and to diversify into long-term areas including service stations and more deeply into logistics.

GIC already has a big presence in logistics via a tie up with Dexus and owns traditional office buildings, including half of Sydney’s Chifley Tower and Plaza but has chased new areas not as affected by the pandemic.

GIC also owns shopping centres around Australia but has not added to these holdings as they have been hardest-hit and face the most difficult road to recovery.

The group’s actions are followed by other Singaporean companies, and listed trusts from the city-state have also been active, with Ascendas and Keppel REIT buying suburban buildings in Sydney, partly on the basis that they will benefit from a coronavirus driven shift away from traditional CBDs.

Purchases by the Singapore groups are also seen as less likely to be contentious in winning foreign investment approval, whereas moves by Chinese parties are viewed as likely to attract greater scrutiny in light of political tensions between Canberra and Beijing.

The ESR Australia Logistics Partnership was launched in March.