When it comes to commercial real estate investment into the U.S., Singapore continues to be the little island country that could. It repeatedly punches above the weight class suggested by its minuscule land area and places near the top of the heavyweight cross-border funding sources.
Take last year, for example. According to data from Real Capital Analytics (RCA), Singaporean companies placed roughly $15.7 billion into 649 U.S. properties, good for 21.8% of all cross-border investment volume. This dollar amount was a whopping 516% increase from the previous year, keeping Singapore on a steady climb up the ranks of overseas sources for inbound capital.
In 2019, Singapore was No. 6 among foreign-capital sources. The Asian nation climbed two spots to No. 4 in 2020 as other normally big spenders pulled back on U.S. investments during the thick of the COVID-19 pandemic. Proving that the prior year was no fluke, however, Singapore rose to second place in 2021 behind Canada — and that’s without the benefit of proximity.
Per RCA, three of the top 10 cross-border buyers in 2021 had Singaporean ties, including the company topping the list. That would be GIC, the sovereign wealth fund established by the country’s government in 1981 to manage its foreign reserves. GIC has been an active player in the torrid U.S. warehouse and distribution sector, ending last year by leading a group of investors in the acquisition of an industrial-asset portfolio from Swedish equity firm EQT.
The deal (which included 328 properties spanning 70.5 million square feet in major cities such as New York, Los Angeles, Chicago, Dallas and Atlanta) was for roughly $6.8 billion, making it one of the largest deals on record for industrial real estate. GIC’s reported stake in the transaction was 50%, making its $3.4 billion contribution the eighth-largest private investment deal ever signed by a sovereign wealth fund.
Interest in industrial space from Singaporean investors helped international investment in this sector soar to new heights last year. JLL reported that cross-border investors totaled $19.5 billion in industrial real estate activity in 2021, up 152% year over year. Singapore accounted for an astounding 57% of this deal volume as shrewd investors from the country have specifically targeted the safe and high-potential industrial market as a space to deploy capital.
But it’s not only warehousing and logistics that have caught the eyes of Singaporean investors. Joining GIC in the nation’s triumvirate of big-ticket buyers of U.S. assets in 2021 were sister real estate investment trusts Mapletree Investments and Mapletree Industrial, which are listed on the Singapore Exchange’s main board. More recently, Mapletree Industrial has dabbled in data, including a $1.3 billion purchase of 29 data centers across the U.S. last year. Combined, the two entities participated in deals that totaled more than $5 billion last year, according to RCA.
Does Singapore’s strong 2021 portend a similarly robust output this year? That’s not quite clear just yet. Cross-border investment saw its highest-ever quarterly level to end last year, according to JLL, so it’s clear that foreign investors are once again looking outside their own backyards for opportunities. But even with investment levels normalizing as the pandemic subsides, new headwinds have surged in the form of the Russia-Ukraine conflict and rampant stateside inflation. Whether these new challenges dampen Singaporean investment appetites will go a long way toward determining the tiny but mighty country’s output moving forward. ●
