The Return of Sovereign Wealth
CANNES, FRANCE-Sovereign Wealth Funds are tracking the path of all other global investors--and they're coming back. The recovery is raising all boats, and SWFs, which during the recession had to pull in their global claws to focus on issues closer to home, are once again looking for deals. That is the word from a session held at MIPIM here Wednesday morning--"Capital Requirements: Understanding What Sovereign Wealth Funds Are Looking For"--in which SWFs were dissected.
Of course, this is not to say that the funds have been absent totally. Richard Yorke of Real Capital Analytics put the cumulative SWF activity in real estate at €17 billion since 2008. But the expectation on the part of all panelists is that, with the global economic drain slowly lifting, SWFS will hit a new stride in the coming year. Fadi Moussalli of Jones Lang LaSalle added that with oil prices on the rise again, Saudi funds in particular have gained an additional appetite.
SWFs were divided into four main groups by Moussalli: Generational funds focus on preserving wealth for their kids; opportunistic funds seek the value add; strategic funds consolidate local cash flow from government assets; and for government-backed developers, well, the name says it all.
Geographic origin aside, most funds fall into similar investment patterns, the panel agreed: Top-tier cities such as New York, Paris and Rome are expected, although more funds are turning to emerging markets such as Rio and Singapore. They go for mass--the big-ticket, large office or retail investments. But again, said Paul Clark of The Crown Estate, as the appetite grows for emerging markets, SWFs are pushing out to residential and to development opportunities there as well.
Partnerships are also big in the goal for SWFs, and they seek partners with like (read: long-term hold) strategies.
But an ongoing issue for soveriegn wealth funds is transparency, apparently an ongoing theme at this year's conference. One of the investment goals, according to Moussalli, is international good will, but all panelists agreed that the lack of transparency hinders the understanding that engenders that good will. "They're moving in the right direction," he concluded, " but there is still a long way to go."
You can now be notified via email if this story is updated by clicking on the "Follow this Story" link. You must be a registered member to take advantage of this "members only" benefit.