Wednesday, March 9, 2011

MIPIM 2011: Understanding what sovereign wealth funds are looking for

Reporting from MIPIM 2011 Day 2:

Sovereign wealth funds, or investment vehicles created from a country's reserves with the purpose of benefiting future generations, invest across many asset classes including real estate. Traditionally, these funds invest in prime office buildings in "prime" cities like London, New York, and Tokyo, with an interest in their home markets as well. As sovereign wealth funds continue to look for properties with strong fundamentals, there has been an increasing trend to focus on other investment vehicles, property types, and geographies.

Wednesday's panel "Capital Requirements: Understanding What Sovereign Wealth Funds Are Looking For When Investing in Property" highlighted recent investments in hotels and residential complexes, emphasizing that they added diversification to the portfolio. Emerging economies are the targets of increasing interest, particularly markets like Rio de Janeiro, Taipei, and Seoul. A trend that should continue as the changing economies of the world create new definitions of developed and emerging markets.

Despite strong portfolio returns and acquisitions of high-profile properties around the world, transparency concerns exist. Transparency is also something that has different meanings around the world.

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