GIC targets AUD800m countercyclical investment in Brisbane, Perth

Singapore’s sovereign wealth fund is to invest AUD800m (€582m) in Australian real estate in anticipation of a recovery in some of the country’s more challenged markets.

IPE Real Estate understands that GIC has hired Charter Hall Group and Primewest to invest in Brisbane and Perth, two cities suffering from high vacancies and an oversupply of commercial space. 

GIC has given listed company Charter Hall AUD500m to invest in Brisbane and allocated AUD300m to Perth-based developer Primewest.

According to one source, Charter Hall has been made “lead manager, tasked to do all transactions” for the mandate and Perth-based Primewest will have a secondary role.

GIC and Charter Hall did not comment. John Bond, co-founding director of Primewest, was not available.

GIC is known to have a countercyclical strategy when it invests in Australia’s estate market, and the source said GIC was now looking to buy opportunistically in Brisbane and Perth as other investors look to exit the markets.

The recent downturn in the resources sector has sent vacancies soaring in Brisbane and Perth, with Perth reaching a high since the collapse of global commodity prices.

Brisbane is also suffering from an oversupply of space, although some market commentators are anticipating a recovery in the coming months.

A recent report from Colliers International showed vacancy rates in Brisbane (16.9%) and Perth (21.8%) to be more than double those of Sydney (5.6%) and Melbourne (7%).

GIC has been investing in Australian real estate over the past 20 years, but in 2013 it began taking profits, selling assets that included five-star hotels, office buildings, industrial assets and holdings in listed real estate investment trusts.

In 2015 it sold an Australian industrial portfolio to fellow Singaporean company Ascendas for more than AUD1.1bn

It is estimated that GIC has withdrawn some AUD4bn of capital from Australian real estate in recent years and reinvested it into other global markets.

But the sovereign wealth fund continues to own core assets such as the Chifley Tower office tower, the Queen Victoria Building and Strand Arcade in Sydney’s central business district.

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