Practice Briefing: The significance of real estate in sovereign wealth funds

Purpose – Sovereign wealth funds (SWFs) are amongst the leading institutional investors globally, with over $16.9tn in assets. This practice briefing examines the significance of real estate in SWF portfolios. Case studies of leading SWFs are presented concerning their real estate portfolios. The strategic implications for SWFs and real estate professionals are also assessed. Design/methodology/approach – A range of information sources are used to assess the significance of real estate in SWF portfolios. Case studies highlight the strategies used by SWFs to obtain their real estate exposure. Findings – SWFs are amongst the leading global real estate investors, having over $465bn in real estate assets. They use a range of effective strategies to obtain their real estate exposure, including direct real estate, joint ventures/co-investment, non-listed real estate funds and debt financing. Direct real estate and joint ventures/co-investment are seen as the preferred real estate strategies by SWFs. Practical implications – Real estate is an important asset class for SWFs, typically accounting for 7% of their total portfolio. In-house teams and external real estate asset managers are used to deliver their real estate agenda. Opportunities for leading real estate professionals are available to assist SWFs deliver their real estate agenda going forward. Originality/value – This is the first paper to examine the significance of real estate in SWF portfolios at a global level. Major insights are provided concerning how SWFs obtain their real estate exposure and how they deliver their real estate strategy. This study expands our understanding of the significance of real estate as an important asset class by leading institutional investors.