GIC says sub-prime hurting Asia property

GIC says sub-prime hurting Asia property

 

SINGAPORE – The real estate arm of sovereign wealth fund the Government of Singapore Investment Corp (GIC) said on Thursday that the US sub-prime crisis is beginning to hurt Asian property markets such as Japan and Australia.

 

‘The contagion effects of the sub-prime crisis can potentially accelerate the downward spin of the current property cycle,’ Seek Ngee Huat, the president of GIC Real Estate, said in a speech at a property industry conference.

 

‘Some market weakening is being sensed in Asia, particularly in Japan and in Australia.’

 

The comments came after Dubai World, the investment firm of the Dubai government, said last month the US sub-prime housing crisis has slowed its investment decisions this year, but it is still holding on to US real estate assets.

 

GIC, estimated to be the world’s third-largest sovereign wealth fund with US$330 billion in assets, is also ranked among the world’s top 10 property investors, owning buildings such as Merrill Lynch’s London office and Westin Paris.

 

GIC’s Mr Seek said that he sees opportunities amid the sub-prime wreckage, but added there would be competition from other institutional players.

 

‘As always weak markets favour those with the capacity to take strategic positions, and so the sub-prime meltdown presents threats as well as opportunities,’ he said.

 

Mr Seek said GIC started out investing in developed markets and only started to focus on emerging markets in Asia in the mid-1990s.

 

Singapore, which saw private home prices jump 31 per cent in 2007 in the largest rise in eight years, is witnessing a slowdown as sales volumes slumped in the first quarter to the lowest since the 2003 Sars epidemic.

 

The Singapore government’s moves to cool the property market, by ending a scheme that allowed delayed payments, coupled with the impact of a global slowdown, have already hit the bottomline of developers CapitaLand and Keppel Land. — REUTERS

 

Source: Business Times

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