The Government of Singapore Investment Corp’s (GIC) real estate arm warned on Thursday about a looming oversupply of luxury hotels and malls in India although it remained bullish about the country’s longer-term prospects.

“I would probably stay away from luxury hotels because I think there is a huge supply coming... I would also stay away from retail malls in the short term for the same reasons,” GIC Real Estate Deputy President Goh Kok Huat said at a property seminar in Singapore.

 

GIC is the world’s fourth-largest sovereign wealth fund and manages estimated assets of at least US$200 billion ($267.4 billion). It does not disclose details of its assets.

 

Goh said GIC Real Estate, one of the world’s top 10 real estate investors, is invested in India but he declined to indicate how large its India investments were relative to the size of its portfolio.

 

Goh, who is also GIC Real Estate’s regional head for Asia, said India’s economy had the potential to grow by more than the 7-8% pace seen in recent years, which would be positive for real estate. 

 

He added that his favoured sectors in India were offices in key Indian cities and residential property as a whole.

 

But he warned “India is going to be a lot messier round the edges of the growth trajectory” and that business cycles in the Indian real estate sector tended to be relatively short.