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One Of The World’s Biggest Sovereign Wealth Funds Is Getting Into PropTech Investment

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Singapore’s sovereign wealth fund is starting to invest in the PropTech sector, as the world’s biggest institutions and real estate owners continue to put money into the technologies that are changing the sector.

GIC, which has around $400B of assets including about $27B of real estate, has started to invest in venture capital funds that specialize in PropTech, and is also looking to increase its investments in real estate companies at the leading edge of technological change.

“We have gone with the VC funds who are actually the ones who are out there backing the individual PropTech companies,” GIC Head of Europe Real Estate Madeleine Cosgrave said on a panel at the Future:Proptech conference.

One Of The World’s Biggest Sovereign Wealth Funds Is Getting Into PropTech Investment
GIC's Madeleine Cosgrave, Union Investment's Tania Bontemps, L&G's Jon Avery, Fidelity's Alison Puhar and Corestate Capital's Audrey Lynn Klein

She said GIC had a specific pot of capital set aside for PropTech investment outside of its normal real estate investment activities, but did not say how much, or which funds GIC had backed. The investments will include startup companies.

Specialist PropTech VC funds are starting to raise significant amounts of capital to invest in the sector, and many of them are backed by big real estate owners like GIC.

Last month Fifth Wall raised $468M for its second fund, Securities and Exchange Commission filings show. Hines and CBRE were among the backers of its first fund, and GIC invested alongside Fifth Wall when it backed a funding round for scooter company Lime. JLL Spark has a $100M PropTech fund that it is currently investing.

Cosgrave said GIC is looking to make a financial return on its investment in PropTech, but also to learn about the technological trends affecting real estate and apply them to its wider portfolio.

“Speaking to the managers, they take an approach that around a third will fail, about a third will make their target return, and a third will do much better, and that seems about right,” she said.

“Of course we hope we make a return from these investments, but they also give us a lot of value by allowing us to understand the trends that are impacting the market and work out ways for us and some of our portfolio companies to adopt these lessons.” 

CitizenM Tower of London

Cosgrave said GIC is adapting its day-to-day real estate strategy to make sure that existing and future investments are well-placed to benefit from the disruption to the sector being brought about by technology.

“We have what we call an offensive and defensive strategy,” she said. “On the offensive side we are looking at how we think data and technology will change things and making sure our portfolio is positioned to take advantage.”

Examples she provided include increasing the amount of coworking space offered in its office portfolio, including investing in Asian coworking company JustCo; and its investment in hotel company CitizenM, where guests check in via smartphone, and the preferences of regular guests are remembered so that, for instance, the air is a certain temperature.

The defensive side includes making sure assets in sectors like retail that are facing big disruption are as resilient as possible, for instance by using pop-up retail platforms like Appear Here.

Other global pension funds including Oxford Properties have set aside a specific “bucket” to invest in PropTech, and one of the world’s two largest real estate owners, Brookfield, set up a division with $250M to invest in the sector last year.