Jetsetters vs. Homebodies

Sovereign wealth funds, “famously secretive” investment pools, are more aggressive than public pensions in seeking real estate abroad, according to researchers from Cornell University, University of Missouri – Kansas City, and Lehigh University.

“The vast majority of their real estate investment activity is in foreign countries,” professors Peng Liu (Cornell), Nathan Mauck (University of Missouri), and S. McKay Price (Lehigh) wrote in apaperposted this month. While public pension and sovereign wealth funds increasingly shop beyond their own borders, pensions “tend to cluster their property acquisitions in developed countries and at home,” they said.

Both types of capital pools are government-owned, but public does not mean transparent for many sovereign wealth funds. These large, often unregulated investors — managing an estimated $7.5 trillion of assets at the end of 2016, per the Sovereign Wealth Fund Institute — have done a “substantially higher” percentage of cross-border investing in real estate than in public and private equity, the researchers found.

“They focus on major markets across the globe ranging from London and New York to Doha and Mumbai,” the authors wrote. While sovereign wealth funds target a broader set of global cities for property deals, public pensions’ target markets are “clustered in North America and select western European and Asian cities.”

Sovereign funds have also shown greater interest in hotels, the researchers found, while public pensions “seem to be more likely to acquire portfolios of single-family residential properties.”

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They authors noted that cross-border investment by sovereign wealth funds can “anxiety among policy makers and political pundits,” who worry about foreign control over important assets.

Sovereign funds generally are “not required to disclose anything to anyone beyond their own governments, where portfolio and transaction details are often tightly held,” according to the paper. As a result, research on these institutional investors tends to focus on stocks, where their positions may be revealed in public documents.

两类公共资金都表现出类似的倾向，在股票市场跨越边界。“然而，我们发现，关于房地产投资，SWF非常可能从事跨境投资。”

The researchers used data collected by the Sovereign Wealth Fund Institute for their study on the funds’ real estate acquisitions. They said academic literature has been “silent” on the subject, though the press has reported on “large transactions that become publicly known.”

For example, theWall Street Journalreported in 2008 that Abu Dhabi Investment Council bought a 90 percent stake in the克莱斯勒大厦in New York for $800 million. In 2016, theFinancial Timesreported that Qatar Investment Authority was buyingSingapore’s Asia Square Tower Onefor $2.45 billion.

Real estate represented 26 percent of all acquisitions by sovereign wealth funds in 2012, according to the paper. On average, sovereign wealth fund transactions are 20 percent larger than public pensions funds’ deals, they found, though compared to public pensions, real estate deals make up a smaller proportion of wealth funds’ total assets.

In the researchers’ sample of commercial real estate transactions, 92 percent of deals done by sovereign wealth funds were cross-border, compared to the 48 percent for public pension funds, according to the paper.

“他们对真实正确的ty investment appears to be substantial,” the authors said of sovereign wealth funds. They seek deals in more “far-reaching markets.”