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Sovereign wealth funds are hunting for real estate – The Real Deal

Sovereign wealth funds are hunting for real estate


Sovereign wealth funds and central banks are looking to capitalize on post-pandemic real estate investment opportunities, following a brief pullback last year.

Nearly three quarters of industry respondents to an Invesco survey believe the pandemic-fueled price fall in valuations will drive property purchases, according to IPE Real Assets.

Participants in the survey included 141 sovereign wealth funds and 82 central banks with a collective $19 trillion in assets.

Average real estate allocations among respondents is down to 8.3 percent this year from 9 percent in 2020 and 8.7 percent in 2019. But around half of wealth funds plan to increase real estate activity from 2020 levels, and about a quarter plan to maintain last year’s level of activity.

Respondents rated industrial and residential properties as more attractive than office and retail properties, which bore the brunt of the pandemic’s economic impact.

Data centers were the most desirable sector based on anticipated yields over the next five years, respondents said in the survey. The growth of the online economy is driving demand for data storage and the sophisticated infrastructure needed to support the modern internet ecosystem.

Leasing slowed last year but is expected to accelerate to potentially record levels. Rents also surged in secondary markets in the second half of 2020. [IPE] — Dennis Lynch

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