Sovereign wealth funds: Sovereigns sets sights on property
Having bailed out the US investment banks in their hour of need, sovereign wealth funds are also turning their vast pools of cash towards real estate. Industry experts predict a doubling of investments by these funds to $10 billion within five years.
Funds from China, Norway, Singapore and Dubai are all making moves into the real estate market, with more set to follow.
Michael Cutteridge, director in the capital markets team at global real estate advisor DTZ, says: "These funds are going to get massive. There are going to be billions of dollars in them and the funds will be placed around the globe."
He says the largest funds are going to come from China but there will also be the petrodollar funds from the Middle East and Norway and the superannuation funds from such countries as Australia and Canada. Open-ended funds from Germany will remain very big global investors too.
"There’s no shortage of equity," says Cutteridge. "There may be shortage of product." There have been several formal announcements from sovereign funds recently, along with strong indications from others as to future commitments to real estate investment.
Norway’s €261 billion Government Pension Fund (formerly the Petroleum Fund) is set to announce a new real estate asset class for its portfolio in its April budget, according to the country’s finance ministry.
The fund is believed to be setting an initial 3% limit – €7.5