Research - JUNE 14, 2016

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Sovereign real estate investments on the rise

by Andrea Waitrovich

Sovereign wealth funds and central banks prefer real estate as an alternative investment, according to Invesco’s Global Sovereign Asset Management Study 2016.

The study of 77 sovereign investors and reserve fund managers across the globe — representing $8.96 trillion of assets — found allocations to real estate rose to 6.5 percent in 2015 from 3 percent in 2012.

Sovereigns explained real estate achieves the diversification benefits and absolute returns they desire with fewer execution challenges than private equity or infrastructure. Approximately 34 percent of sovereigns cite challenges sourcing direct deals for real estate compared to 55 percent for infrastructure.

Some of the large investment sovereigns explained they were diversifying away from high-profile assets in gateway markets (such as New York City an

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