"Given that the real estate sector's investmentcharacteristics--current income combined with long-termappreciation--closely match SWF requirements," said Ray Torto,chief global economist at CBRE, in a statement. "We expect them toincrease their weighting of commercial property to approximately 7%of their total assets. With nearly $4 trillion of total assetscurrently under SWF control, a 7% allocation would mean worldwidecommercial real estate investments totaling $280 billion. To putthis number in context, the entire US institutional-grade propertyportfolio owned or managed by investment managers and plan sponsorsis valued at approximately $330 billion today."

Estimates show that the SWFs could reach total assets of $12trillion by 2015, according to CBRE, which at 7% allocation impliesSWFs would make approximately $725 billion of net propertyinvestments over the next seven years. According to CBRE, thetarget allocations can be achieved if the SWFs diversify futureinvestments widely across geographies.

"Although SWFs are likely to continue to focus on core realestate product in major markets," says Michael Haddock, directorEMEA research at CBRE, in a release, "they will have to put capitalto work in new geographies and emerging sectors."