One of the largest sources of foreign investment into U.S. commercial real estate continues to be a small island that encompasses less area than Lexington, Kentucky. This nation is Singapore — the compact city-state off the tip of the Malay Peninsula.
Singapore remains a major player in cross-border deals into the U.S., with asset sales involving this country’s investors accounting for $4.12 billion in volume during the four quarters ending in second-quarter 2021, according to Real Capital Analytics (RCA). That’s good for third among cross-border funding sources during this period, surpassed by only Canada and South Korea.
For real estate observers, the continued might of Singaporean investors is not a surprise. Funding sources from the notably affluent nation have been operating actively on the world stage for more than two decades, culminating in a high-water mark of more than $25 billion in income-producing, overseas purchases in 2015. Singapore’s investors have a reputation for branching out globally. They have placed their money in properties everywhere from Australia to Brazil, with assets in the U.S. also receiving their fair share of attention.
Take the past few years, for example. Singapore was third among countries that injected capital into U.S. assets in 2018, dropped to seventh in 2019 and climbed back to fourth last year, according to RCA. And while many investors abroad have pulled back on their American investments during the COVID-19 pandemic, those from Singapore have not, increasing their U.S.-based spending by 31% year over year in the 12 months ending in June 2021. Their total volume during this period also exceeded their full-year 2020 volume by 53% and their 2019 volume by 80%. Adaptable Singaporeans, it appears, are finding opportunities in an environment where others have balked.
Part of this is due to a long-running investment strategy from Singapore’s investors that isn’t limited to traditional commercial-property sectors. While there’s no shortage of office and retail properties within their portfolios, the country’s financiers also have historically dabbled in segments such as logistics and data centers, sectors that have boomed recently due to the surge of remote work and e-commerce during the pandemic.
Mapletree Industrial, a real estate investment trust (REIT) listed on the Main Board of Singapore Exchange, has been at the forefront of activities of late. Per RCA, Mapletree logged the largest volume among Singaporean cross-border buyers from Q3 2020 through Q2 2021, leading sister REIT Mapletree Investments and fellow public trust Ascendas. In May 2021, Mapletree Industrial dropped $1.3 billion to buy a portfolio of 29 data centers across the U.S., totaling 3.3 million square feet of leasable space in pricey markets such as Los Angeles, Chicago and Houston. The deal came 20 months after the company joined Mapletree Investments in acquiring another sizable data-center portfolio, a $1.4 billion purchase of 10 properties across the U.S.
While interest in such properties has grown, more conventional assets haven’t fallen off Singapore’s radar. Prime US REIT, which despite its name is Singapore-based, acquired a pair of Class A office towers this past summer: One Town Center in Boca Raton, Florida, and Sorrento Towers in San Diego. The company paid $245.5 million for the two sites, a deal that was partially funded by a private placement of securities that raised $80 million.
Moving forward, it appears that Singaporean investors carried over their momentum into Q3 2021. Preliminary RCA data reported by London-based commercial-property consultancy Knight Frank put Singapore’s global outbound real estate investment volume at $5.2 billion during these three months, up 54% from the same period last year. Even the uncertainty of a global pandemic, it seems, does little to stop shrewd Singaporean players from finding opportunities to invest. ●