Connect with us

Real Estate: A Powerful Sovereign Wealth Fund Investment Trend

Published

on

In September this year, Norway’s sovereign wealth fund, in one giant swoop paid US$ 1.5 billion for minority interests in two Boston properties and the former Citigroup Center in Manhattan. The amount of capital floating en route for core real estate is astonishing, more and more sovereign funds are allocating toward properties. In fact, for public institutional investors, real estate is one of the top sectors of direct investment.

The Growth of Direct Sovereign Wealth Fund Transactions

sovereign wealth fund deals
Source: Sovereign Wealth Fund Transaction Database – Data in Billion USD

Real Estate Figures: Sovereign Wealth Fund Transaction Database Data

According to the Sovereign Wealth Fund Transaction Database, comparing the period of September 30, 2014 going back 12 months, total direct public investor transactions in real estate were US$ 36 billion compared to US$ 23.22 billion for transactions starting at September 30, 2013 going back 12 months. Limiting the database universe to sovereign wealth fund direct transactions exclusively, by comparing figures in similar periods, the figures are US$ 29.11 billion for 2014 versus US$ 21.15 billion for 2013. Currently, with regard to the Sovereign Wealth Fund Transaction Database, sovereign wealth funds make up the majority of transactions, thus the number of total public institutional investor transactions in properties should be much higher.

Looming 2014 Sovereign Wealth Fund Trends in Real Estate

    1. More Joint Ventures, Finding Local Partners
    2. Tax Issues, Large Minority Interests
    3. Other Key Cities, Besides Gateway Cities
    4. Luxury and Hotel Properties
    5. Indian Real Estate (Modi)

A resilient second wave of Asian institutional capital is bypassing London, flooding bits of continental Europe. In addition, Gulf sovereign wealth funds such as the Kuwait Investment Authority, Qatar Investment Authority and the Abu Dhabi Investment Authority have been active investors in continental Europe. This year, Constellation Hotel Holdings, controlled by the Qatar Investment Authority (QIA), agreed to pay €330 million for the InterContinental Paris – Le Grand and allocated €60 million for future hotel renovations. This can also be said of the large Canadian pension investors like the CPPIB and OMERS.

Another Bubble?

Sovereign wealth funds and pensions are at risk of a supply drought in core properties. With higher real estate fund commitments and deployment amounts, an unprecedented level of demand is being created by large public institutional investors. This trend could be exacerbated if U.S. defined contribution retirement accounts make the push into real estate assets.

Mauritius Aims to Sell Citizenship and Passports to Bolster National Wealth Fund

Published

on

The island country of Mauritius plans to offer foreigners a chance to obtain country citizenship in exchange for a non-refundable contribution of US$ 1 million to the national sovereign wealth fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

CapitaLand Aims to be a Real Estate Funding Machine

Published

on

CapitaLand Investment Management, a real estate investment management arm of Singapore-based CapitaLand, hired Caleb Shen as managing director for fund management. CapitaLand is keen on growing its real estate fund management business. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Treasurer Perrottet Reveals the NSW Generations Fund

Published

on

New South Wales wants its own Future Fund.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Popular

© 2008-2018 Sovereign Wealth Fund Institute. All Rights Reserved. Sovereign Wealth Fund Institute ® and SWFI® are registered trademarks of the Sovereign Wealth Fund Institute. Other third-party content, logos and trademarks are owned by their perspective entities and used for informational purposes only. No affiliation or endorsement, express or implied, is provided by their use. All material subject to strictly enforced copyright laws. Registration on or use of this site constitutes acceptance of our terms of use agreement which includes our privacy policy. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. SWFI is a minority-owned organization.