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Sovereign Wealth Funds Pursue Institutional Real Estate

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Ever since the end of 2010, direct sovereign wealth fund transactions in institutional real estate have risen. Larger sovereign funds tend to take on direct investment opportunities, while public investors under US$ 30 billion in assets rely heavily on real estate funds. Sovereign wealth funds with renewed confidence are investing directly into core real estate, creating competition among pension funds, REITs and real estate fund managers. Quantitative easing has demolished interest rates, making real estate assets particularly attractive. Risk-averse sovereign funds favor major European and American cities in prime markets, especially when investing without real estate fund managers.

Sovereign wealth funds are enhancing allocation to real estate.

Traversing up the risk spectrum, some sovereign wealth entities like Qatari Diar have mandates to partake in co-investment developmental projects. CityCenterDC and Hudson Yards are two major developmental projects in the Eastern United States where Gulf government investors have allocated capital.

Direct Sovereign Wealth Fund Transactions – Real Estate – Billions in USD – Click to Enlarge Graphic
SWFTD_RE_June2013
Source: Sovereign Wealth Fund Transaction Database

According to data from the Sovereign Wealth Fund Transaction Database, 2012 was a noteworthy milestone for direct sovereign fund real estate transactions touching US$ 15.13 billion. Norway’s Government Pension Fund Global had a major impact on the figure, choosing to go direct versus allocating purely to commingled real estate funds.

2013 results are over US$ 5 billion so far.

Korea’s NPS Invests In Crypto Exchanges Amid Crackdown

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South Korean news outlets have reported that South Korea’s National Pension Service (NPS) has unwittingly invested roughly US$ 2.4 million in four local cryptocurrency exchanges – Korbit, Upbit, Coinplug, and Bithumb – even as regulatory officials move to subdue the unbridled enthusiasm for crypto trading that has flourished in the tiny country. The US$ 550 billion pension scheme invested in the cryptocurrency exchanges indirectly through two venture capital funds handled by external managers with exclusive rights over asset allocation, according to an NPS officer.

Crypto trading has proved wildly popular in South Korea, drawing an estimated one million citizens to the largely unregulated exchanges that have cropped up over the past few years. South Korea, which is ranked first in the world in terms of internet sped, is the largest market for cryptocurrency transactions behind Japan and United States, and accounts for 29.8% of trade globally, according to a report released by the Korea Insurance Research Institute (KIRI) in December 2017.

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Ripple Attempts to go the Central Bank Route

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San Francisco-based Ripple, a tech company that professes the use of blockchain to reboot the payment systems globally, landed a big deal with the Saudi Arabian Monetary Authority (SAMA). Ripple started a pilot program that will be spearheaded by SAMA and a few Saudi banks to deploy xCurrent for cross-border payments. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Investment Corporation of Dubai Eyes $1 Billion Loan Deal

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The Investment Corporation of Dubai (ICD) plans to raise US$ 1 billion in a loan to refinance existing debt. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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