Singapore’s sovereign wealth fund GIC has indicated that its appetite for UK commercial property is undimmed after Brexit, with a £48.5m deal to invest in a development owned by FTSE 100 retail property group Hammerson.
The UK group is selling 50 per cent of the Watermark development, which includes a cinema and restaurant complex in Southampton to the Singapore state investor. Hammerson and GIC jointly own the adjacent Westquay shopping centre.
Hammerson, which will manage the two Southampton centres, revealed a £51m decline in the value of its British portfolio in the six months to June this year, which it blamed partly on the increase in stamp duty in April.
However, the company said there was no immediate lapse in commercial discussions with tenants after the Brexit vote, and that footfall was consistent with trends since the beginning of the year.
While investment flows into London commercial property have dropped to less than half their level of a year earlier since the UK’s vote to leave the EU, demand from Asian buyers has held up better.
Chinese investment has fallen by 22 per cent to £1.25bn since the referendum, making it a larger proportion of the market, according to data from Real Capital Analytics.
The Southampton deal is the latest move by GIC to extend its UK exposure. The fund partnered with Global Student Accommodation to acquire a UK student residence portfolio in September. The terms of that deal were not disclosed.
GIC also teamed up with Orchard Street Investment Management to create a £150m UK commercial property fund in November.
Madeleine Cosgrave, a regional head of GIC’s real estate unit, said: “As a long-term investor, we focus on ensuring that income streams from our investments are stable and resilient.”
Watermark’s mix of food and leisure tenants include sourdough pizza chain Franco Manca and National Amusements’ high-end cinema outlet Showcase Cinema de Lux.
GIC does not disclose the size of its assets under management, but is regarded by analysts as one of the world’s biggest state investors. According to the Sovereign Wealth Fund Institute it had $350bn in assets under management, as of June this year.
Lim Chow Kiat, GIC’s chief investment officer, told the Financial Times this year that he believed the UK’s long-term prospects remained strong. About 7 per cent of GIC’s portfolio is based in UK assets, its third biggest geographical exposure outside Asia.
The Watermark development opened this month. David Atkins, chief executive of Hammerson, said: “The new restaurant and leisure complex at Watermark is the largest development of its kind in the UK, showcasing our skills in creating consumer-led destinations that cater to the family experience.”