Sovereign wealth funds turn to real estate
Sovereign wealth funds have been snapping up international headlines — and real estate — as the state funds make a deliberate move into the commercial property sector. Sovereign wealth fund assets will increase by 60 percent before 2016, according to UBS Global Asset Management, a force guaranteed to shift the foundations of the global property market as more capital is flooding into gateway cities.
With asset holdings in the multibillion range, sovereign wealth funds tend to focus on acquiring trophy properties, increasing the demand for prime properties in gateway cities such as Paris, London, New York City and Boston. As sovereign wealth funds look for risk-adjusted returns in real estate, trophy assets become a competitive commodity and also increase the liquidity of the marketplace.
Dan Fasulo, managing director at
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