Investments of sovereign wealth funds in real estate, at the lowest level in the last eight years, due to the pandemic. State-controlled investors preferred infrastructure and pension funds
Sovereign wealth funds have avoided office and hotel space by 2020, with real estate investment falling to its lowest level in eight years due to the coronavirus pandemic and Brexit.
In contrast, investments in infrastructure of sovereign wealth funds and public pension funds amounted to $ 53.2 billion, a level slightly lower than in 2019, according to data published by the consulting firm Global SWF.
Of the total real estate investments, worth $ 30.7 billion in 2020, more than a third were directed to logistics facilities, such as warehouses, according to Global SWF.
“State-controlled investors believe that, in the long run, infrastructure needs will be about the same, but they are migrating from office space to logistics, waiting for a possible permanent change in the work culture,” Global SWF’s annual report said.
Measures to maintain social distance introduced by governments in various parts of the world in response to the coronavirus pandemic have led to the emptying of office buildings, hotels and problems for retailers. In addition, they have led sovereign wealth funds to rethink their approach to a segment that has long been a key area for their investment strategies.
In 2020, sovereign wealth funds allocated $ 5.3 billion of their office space investment, half of the 2019 level, while hotels attracted $ 1.5 billion in investment, compared to $ 4 billion in 2019.
Office space has lost its appeal among sovereign wealth funds after Brexit caused them to stop spending to make purchases on the premium real estate market in London, according to Global SWF.