He’s concerned that as interest rates rise, that will compress the spread between bond yields and capitalization rates, or the ratio of a property’s net operating income to its asset value, which provides an estimated return.
That means GIC has been looking at assets that both have “relatively generous” spreads over bond rates and that have room for income growth over the longer term, he said.
Asked his opinion of various property markets, Goh said when it comes to China, it’s important to ignore short-term volatility and focus on the long term. On Japan, he said to consider the prospects of tourism, adding “it’s huge.”
He believes Australia and New Zealand will remain key markets for GIC, due to their liquidity and depth, while the U.S. market, which is both deep and transparent, “can’t be ignored.”
He considers both Indonesia and Brazil markets to watch, but believes the European property market is difficult as pricing is high, while fundamentals are weak. For those willing to take risks, Goh believes the India market may offer “supernormal profits.”
Those views track with GIC’s recent deals. In October, GIC tied up with developer Tishman Speyer for an office development project in Hyderabad, India. That followed a March deal with developer Brigade Group to buy a property in a Bangalore IT Special Economic Zone.
It also entered a joint venture with Macerich in October to invest in five retail assets in Oregon, California, Arizona and Texas. In May, GIC tied up with the Canada Pension Plan Investment Board to buy a mall in Seoul for a total $263 million. In late 2014, GIC acquired an office building under development in downtown Rio de Janeiro and in Japan, it tied up with Global Logistic Properties to acquire an $8.1 billion logistics portfolio in the U.S.
Last year, GIC tied up with Scentre Group to acquire five New Zealand shopping centers and entered a joint venture with Goodman Property Trust to invest in Auckland’s developing Viaduct Quarter.
—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1