Subprime hurting Japan, Australia property: GIC

By Kevin Lim and Daryl Loo

SINGAPORE (Reuters) - Government of Singapore Investment Corp (GIC), the sovereign wealth fund with an estimated $330 billion in assets, said the U.S. subprime crisis is beginning to hurt Asia-Pacific property markets such as Japan and Australia.

"The contagion effects of the subprime crisis can potentially accelerate the downward spin of the current property cycle," Seek Ngee Huat, president of GIC Real Estate, told a property industry conference on Thursday.

"Some market weakening is being sensed in Asia, particularly in Japan and in Australia."

In Australia, latest data shows a slump in demand for mortgages -- down 6.1 percent in March from February -- and a slowdown in house price growth, though the picture is mixed across the country.

In Japan, housing starts fell 15.6 percent in March from a year earlier, while a growing backlog of unsold apartments threatens to dent already feeble economic growth.

Seek's comments follow similar remarks by Dubai World, an investment firm owned by the Dubai government, that it had become more cautious with property investments due to the U.S. subprime mortgage problem.

GIC is estimated to be the world's third-largest sovereign wealth fund, according to a recent report by Morgan Stanley.

The fund, which will only say it manages over $100 billion in assets, is ranked among the world's top 10 property investors, owning buildings such as Merrill Lynch's London office.