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- September 1, 2014: Vol. 26, Number 8

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SWFs catch the fever: Their coffers bulging with trillions of dollars, sovereign wealth funds are boosting their real estate commitments across the Western Hemisphere

by Paul Rose

 

More than two-thirds of the world’s sovereign wealth funds have increased investments in real estate during the past 12 months as they shift from volatile equities and low-yielding bonds to alternatives that offer higher returns. With a technically unlimited time horizon on their investment commitments and willingness to accept lower yields, the implications for other real estate investors could be significant.

Recent reports suggest that SWFs may soon be increasing their allocations to real estate even more, and one of the world’s largest SWFs, Norway’s Government Pension Fund Global, plans to invest nearly $9 billion in real estate during the next three years. Norges Bank Investment Management, which invests on behalf of the fund, intends to initially concentrate on core retail and office properties in Boston, New York City, London, Paris, San Francisco and Washington, D.C., and NBIM is also considering investment opportunities in global cities out

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