Singapore-based SC Capital Partners (SCCP) is an Asia Pacific real estate investment management firm specialising in physical assets such as office, retail, logistics and student accommodation properties.
Natalie Massey (Executive Director, Deputy Fund Manager), Isaac Leo (Director, Investment) and Chris van Beek (Executive Director, Investor Relations) speak with ATEED about the positive economic fundamentals that attracted them to Auckland.
ATEED: What first attracted you to investing in Auckland?
SCCP: We like Auckland for a number of reasons, including the depth of foreign capital, stable political environment, transparent legal system and tax regime, and there are quite a lot of infrastructure projects available to invest in.
We’ve made two investments in New Zealand so far: an office building in Auckland (bought in 2018) and a student accommodation property in Wellington (acquired in 2017).
The core/core-plus real estate fund we’ve used for these investments is SC Core Fund (SCORE+), which invests in key gateway markets in Asia Pacific, namely: Australia, Hong Kong, Japan, Singapore, South Korea and New Zealand. SCORE+ seeks to offer institutional investors stable & resilient income growth and long-term capital appreciation through active asset management and repositioning. The key themes of the fund are urbanization & growth corridors, education and technology.
What is your existing investment type?
We invest across all real estate sectors in Asia Pacific apart from hotels.
Are there any special challenges involved in investing in New Zealand?
Distance and time zone differences could be seen as one challenge, although we work with various local asset managers and property managers. Another was obtaining insurance details about what happens in the event of an earthquake. Other than that, the challenges were actually pretty limited as New Zealand is a sophisticated and transparent market where information is readily available.
What are you looking for specifically?
We look for good-quality assets which offer stable, resilient income growth that are in line with our key themes of urbanisation & growth corridors, education, and technology. We work to diversify our portfolio across countries and sectors in the Asia Pacific region.
The majority of our investors are institutions such as pension funds, insurance groups and sovereign wealth funds from Europe and the USA. SCORE+ gives them exposure to the Asia Pacific real estate market. We do see a growing interest for SCORE+ from Asia Pacific-based institutions as well and we would welcome the opportunity for New Zealand investors to explore our strategy in more detail.
From a global real estate market perspective, while the New Zealand market is pretty small, we like the fundamentals and the stability of the market.
Do you do your own research or get others to do it for you?
Our investment team does their own research, but we do engage professional consultants as well.
How do you find out about investments?
We are in constant dialogue with real estate agencies like CBRE, Jones Lang LaSalle, Savills, Colliers, and Bayleys. Many New Zealand brokers are very active and, before the pandemic, many made regular trips to Singapore and Hong Kong.
How important do you think economic development agencies are as providers of information and services to facilitate investment?
EDAs are very important to help us understand what assistance is available, and to introduce new partnerships, networks, and investment opportunities. It’s great to have information available online, but also very helpful to have a direct point of contact.
What were the challenges you faced in finding information to help with your decision?
The challenges were quite limited as it is a transparent market. It also helped that we had existing broker relationships.
Have you accessed local business networks since you invested?
Yes. Having invested in New Zealand for a number of years, it is vital for us to get to know people better and build relationships with local business networks. As a foreign investor, it is important that we can access accurate and trusted information in order to keep up to date with what’s happening in the market.
What impact has COVID-19 had on your investment decisions? How is the pandemic going to shape your decisions to further invest going forward?
The biggest short-term impact is the inability to travel and to inspect properties.
Longer-term, there will be an increased focus on rent collectability and closer scrutiny of the nature of leases, such as whether they include clauses related to emergencies like the current global pandemic. For some assets, this could have an impact on net income.
Virtual due diligence has become an important and useful tool, especially in the early phases of decision-making. A lot of investors are conducting due diligence through virtual tours via Zoom, drone images and other footage.
But due diligence is not just about the physical building itself. It is also about strong property and market fundamentals. Notwithstanding the short-term impacts of COVID-19, our investment themes and strategy remain relevant and New Zealand will continue to be a key market.
Are you looking for new investment opportunities?
Yes, we are always on the lookout for attractive opportunities in Auckland and across the region.