For 2022, Trend Shows Sovereign Funds and Public Pensions Thirst for Direct Private Real Estate Investments
Posted on 07/09/2022
Armed with more money either from central bank transfers or from the rising price of oil, Asian and Middle Eastern sovereign wealth funds continue to pursue real estate investments globally in nearly all institutional markets. Singapore’s GIC Private Limited remains a prolific direct property investor, partnering with firms like Greystar Real Estate Partners to invest in student housing, or going at it alone on some deals. For example, GIC did a massive deal with Seibu Holdings Inc. investing in 76 assets of the Hotel and Leisure assets for over a billion dollars. Norway Government Pension Fund Global rekindled its direct property investment program. The Norwegian sovereign investor acquired a 50 percent stake in Berlin’s Sony Center for 677 million euros. The Sony Center is a Sony-sponsored complex of eight buildings located at the Potsdamer Platz in Berlin, Germany designed by Helmut Jahn. The California Public Employees Retirement System stands out among U.S. public pension plans as a major co-investor in real estate.
Private Direct Investments by Sovereign Wealth Funds and Public Pensions in the Real Estate Sector
SWFI.com query: BuyerTypes: Sovereign Wealth Fund, Public Pension. Type: Deal, New Security Issues. Sector: Real Estate. AnnouncedDates.
In the first half of 2022, sovereign wealth funds and public pensions have invested directly and privately US$ 28.4 billion in the real estate sector vs. US$ 18 billion in the first half of 2021. This shows the desire of public funds to continue to invest in real assets directly, even as inflation spirals out of control in key Western markets. However, in the second half of 2021, these public funds directly invested privately US$ 42.3 billion.
With regard to direct real estate investments, office and office developments dominated in the first half of 2022, followed by logistics/warehouses and logistic developments, and student housing. Single-family homes and apartments remain a key area for growth, but these types of investments need more expertise with local partners to properly access.
With volatility in public markets, SWFs and public pensions are continually seeking deals across various property markets globally.
