Global Real Estate

Ashby Monk

SWFs are increasingly looking to the global real estate market for investment opportunities:

  • This morning New Zealand’s Superannuation Fund announced its intention to move more of its assets into property with the hiring of Franklin Templeton.
  • Yesterday we learned that the CIC is looking to “pile cash into US real estate.” The WSJ also reminds us of the CIC’s recent investments in an Australian real estate trust (Goodman Group), in Canary Wharf Group, and in Morgan Stanley’s global property fund ($800 million). The CIC is also looking for infrastructure deals in India, Mongolia and Pakistan.
  • Qatar’s various investment vehicles are also investing in property; it was Qatar Holding that joined the CIC in the Canary investment.
  • It was also reported in August that Libya’s SWF was set to “pour millions of pounds into the London property market.”

You get the picture. I have three thoughts on this new trend.

First, these assets really make sense for SWFs. They are generally stable and offer cash flows and capital appreciation over very long-term time horizons. As such, they match up well with SWFs’ long term view; who better to invest in timber-land or toll roads that might not pay off for 10-20 years?

Second, these investments are a bit tougher to value (e.g. compared to stocks and bonds). So they may give SWFs some domestic cover during the ups and downs in the market. Some of these funds have seen the domestic trouble that big losses in volatile and easy to value assets can cause.

Finally, investing in property will undoubtedly raise some political worries in the investment receiving countries. SWFs will need to learn from Japan’s mistakes in the 1980s. That said, perhaps this new wave of real estate investments reflects a more welcoming environment for SWF investments? Time will tell…

2 Responses to “Global Real Estate”

  1. 1 rien huizer September 11, 2009 at 8:51 pm

    Hmmm, bottom fishing,avoiding transparent markets or simply looking for healthy stable rental flows? It makes a lot of difference if one buys equity of leveraged trusts (or even more highly geared derivatives of course. But there must be plenty of cheap looking properties around. That sort of stuff should worry no one (except the funds’ unknown beneficiaries, because even in this game cashed up newcomers may pay relatively high prices.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

RSS Feed


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 370 other followers

Latest SWF News

Visitors Since August 2010

%d bloggers like this: