Sovereign Funds On Hunt For Real Estate


Sovereign wealth funds and central banks are trying to capitalize on post-pandemic real estate investment opportunities after a brief retreat last year.

Almost three-quarters of industry respondents in an Invesco survey believe that the pandemic-triggered drop in valuations will spur property purchases, according to IPE Real Assets.

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

The average property allocation of the respondents fell from 9 percent in 2020 and 8.7 percent in 2019 to 8.3 percent this year. However, around half of the wealth funds plan to increase real estate activity from 2020 onwards, and around a quarter plan to maintain the previous year’s level of activity.

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

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

Leasing has slowed down over the past year but is expected to rise to record levels. Rents also rose on the secondary markets in the second half of 2020. [IPE] – Dennis Lynch

Contact Dennis Lynch