Singapore's GIC Calls US the 'Single Most Important Source of Global Prosperity'

(February 24, 2011) — The Government of Singapore Investment Corp (GIC), ranked as the world’s seventh-largest state investment company by Sovereign Wealth Fund Institute, has said that the US will remain a prime destination for investment.

The sovereign wealth funds’s deputy chairman Tony Tan told Reuters that despite rapid growth of emerging economies, the US, which accounts for more than a third of the fund’s investments, would continue to be the “single most important source of global prosperity.”

The statement by Tan describing the opinions of the GIC is unusual for the usually secretive fund, which does not disclose the size of its fund or detail its investments. While its website asserts that it managers more than $100 billion in over 40 countries, most analysts estimate the fund’s size is up to $300 billion.

Tan further indicated that unemployment, housing sector weakness, and the prospect of high inflation remain risks, with geopolitical risk on the rise following the departure of Egyptian President Hosni Mubarak and unrest across the Arab world, Reuters reported.

Earlier this month, the GIC offered $1.5 billion for a group of bankrupt resorts owned by investors that include the hedge fund Paulson & Co, signaling renewed confidence in real estate investments and heightened faith in a rebound in travel demand following the recession.

According to Bloomberg News, the Singapore fund plans to purchase five resorts, which include Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and the Doral Golf Resort & Spa in Miami that hosted guests including Tiger Woods, Joe DiMaggio and Greg Norman. The resorts filed for bankruptcy on February 1.

Other institutional investors have recently revealed flocking to property in hopes of a rebound. Earlier this month, the head of one of Canada’s most active global investors said that it is eyeing US commercial property. David Denison, chief executive of the Canada Pension Plan Investment Board (CPPIB), which oversees $140 billion in assets for Canada’s national pension plan, told the Wall Street Journal that he has witnessed a spike in the availability of commercial real estate in the US, and that he is expecting that trend to continue.

Also this month, the California Public Employees’ Retirement System (CalPERS) reported that it is expected to revamp its $15.4 billion real estate portfolio, targeting mainly domestic, core or stable income-producing real estate, run by managers in separate accounts. The $226 billion fund reported that it is looking to allocate around $2 billion to real estate deals in 2011 with a new strategy of more reasonable returns after its real-estate portfolio lost nearly half of its value — more than $10 billion — from July 2008 to June 2009. The move reflects a trend among funds to pursue real estate more conservatively after dismal property returns in recent years.