Jeffrey Jaensubhakij, chief investment officer, said that China, whose real estate market contributes to nearly a third of its economy, has “come to the end of its growth model” that relied on infrastructure and property construction.

The slump in China’s property sector has become a significant drag on the broader economy and is exacerbating a liquidity crisis among developers. Authorities are trying to help revive the industry and restore buying sentiment by removing the floor on mortgage rates and encouraging local governments to acquire homes to convert them into affordable housing.

Despite the ongoing property crisis in China, Jaensubhakij said GIC sees opportunities in its residential and commercial properties in major cities with a large inflow of people. In residences, for example, he said GIC has invested in and continues to see “a lot of demand” for rental estates.

In June, GIC reportedly teamed up with China’s Vlinker, a leading rental housing operator backed by Warburg Pincus, to form a $180 million joint venture. The vehicle plans to acquire and develop affordable rental housing projects in Shanghai, Vlinker said in its announcement without naming GIC.

Earlier this month, GIC was also reported to have acquired an additional 48% stake in Shanghai’s largest single-building shopping mall from China Vanke, a state-affiliated property developer.

“As people have looked at Chinese real estate and said I need to get out of everything,” Jaensubhakij said, “some of the best positioned retail assets are still quite valuable, and if you can buy them at a price that you can earn a good return on them, if they’re managed well… I think we can still invest.”

“But it’s different from the areas that we used to invest more heavily on in China before,” he added.

By asset class, GIC has increased its exposure to private equity from 17% to 18% of its portfolio in the year to March. Its allocation to public equities and real estates were unchanged at 30% and 13%, respectively, of its overall investments. Nominal bonds and cash decreased from 34% to 32%.

By geography, the U.S. remains the largest investment destination that formed 39% of GIC’s portfolio in the year to March, up from 38% a year ago. This was followed by Asia excluding Japan — a metric that includes its Chinese assets — which fell from 23% to 22%.

Source: Nikkei asia

Indonesia aims to attract wealthy investors with its new golden visa program, but analysts have warned that the policy could invite cross-border money laundering and drive up housing prices.

The visa scheme was launched last Thursday, making it easier for foreign nationals to invest and contribute their wealth, skills, or expertise to Southeast Asia’s largest economy, Nikkei Asia reported.

Individual investors must establish a company valued at US$2.5 million to obtain a five-year visa or $5 million for a ten-year one.

Alternatively, they can secure a 5-year or 10-year permit by placing funds of at least $350,000 and $700,000, respectively. The money can be placed in deposits or used to purchase Indonesian government bonds and public company stocks.

Another category of golden visa allows individuals to stay for five years by making a deposit of $130,000 in a government-owned bank and buying an apartment valued at $1 million or above.

For corporate investors, a $25 million investment is required to secure five-year visas, and a $50 million investment is needed for ten-year visas, applicable to their directors and commissioners.

The program would have a multiplier effect on the country, enhancing capital gains, job creation, and technology transfer, Asia News Network quoted Indonesian President Joko Widodo as saying last Thursday.

Silmy Karim, head of the country’s immigration agency, said that the new visas will create opportunities for foreign companies already established in Indonesia.
They will also reduce the presence of digital nomads and long-term visitors who contribute little to the local economy while living in tourist destinations like Bali on tourist visas.

Since launching the pilot program for the permits last year, Indonesia has issued nearly 300 golden visas, gaining $123 million in investments.

Nonetheless, experts have raised concerns over potential threats of cross-border money laundering and other criminal activities, as well as housing price inflation.
Many countries, such as Canada, the U.K., and Singapore, have discontinued similar investment visa programs after determining that they do not generate employment and may serve as a way to park speculative money, as reported by Reuters.

“The countries that have revoked the golden Visa policy have anti-money-laundering measures that are stricter than Indonesia, and even they think that the golden Visa will enable cross-border money laundering and illegal investments,” Bhima Yudhistira, executive director at the Jakarta-based Center of Economics and Law Studies (Celios), told SCMP.

He added that the golden visa alone may not have an immediate impact as investors are adopting a “wait-and-see” approach during the government’s transition period, with the current president due to step down in October.

Portugal’s golden visa program previously permitted foreigners to obtain residency by purchasing property, which led to a rise in property and rent prices. It amended its policy earlier this year, removing real estate investment as a route to residency.

Nailul Huda, an economist with Celios, told SCMP: “If golden visa holders can own land in Indonesia, that could be a threat to Indonesian citizens. Land ownership could eventually shift from Indonesians to foreigners, and it could lead to protests from residents.”

“[Authorities] must carefully select and evaluate the contribution [of each applicant],” Asia News Network quoted him as saying.

In response, Silmy Karim said that his office will implement a stringent vetting process for all golden visa applicants, which will include coordination with Interpol and the Financial Transaction Reports and Analysis Center.

Source: Vnexpress