Only the US, China, Japan and Germany have GDPs larger than the total assets held by Estates Gazette Global’s top 100 real estate owners. This year, the top 100 owned a total of $3.6tn of property, a $400bn increase on the figure recorded last year.
Focusing on real assets, rather than debt and securities, the list pulls together investors from all over the globe.
Canada-based Brookfield Asset Management remains the standout leader, with almost $130bn of assets. Blackstone rises to second place from third last year with $94bn, while TIAA-CREF climbs two places to take third with $89bn.
A reduction in total assets from $90.6bn to $86bn saw CBRE Global Investors drop from second to fifth. And despite a $2.7bn increase in assets, China Vanke slipped out of the top five.
US firms remained the largest contingent in the top 100, taking up 32 places and having a combined asset value of $1.3tn. China represented the next largest slice of the rankings, with 17 spots and a total value of $621.5bn.
Together, North American and Asian real estate firms hold $2.8tn of assets, representing 88% of our total 100.
1 North America $1.5tn
2 Asia $1.3tn
3 Europe $603.9bn
4 Middle East $135bn
5 Australasia $43.1bn
By Andrew Moylan, Preqin
Sovereign wealth funds are among the largest allocators of capital to real estate, and have become increasingly important sources of capital to the asset class in recent years. Many of these institutions are also becoming ever more sophisticated investors, building sizeable teams based in multiple locations across the globe.
More than half of all SWFs invest in real estate, with many of the smaller or more recently established SWFs expected to in the future. Of the SWFs with more than $100bn in assets under management, all invest in real estate.
Many of these funds allocate sizeable proportions of their total assets to real estate, with more than half investing upwards of 5% . A not insignificant 9% of these institutions have more than 15% of their total portfolio in real estate. This includes Texas Permanent School Fund General Land Office which allocates 33% of its total assets to real estate, and Alberta Heritage Savings Trust Fund, which has more than 20% allocated to real estate.
SWFs look to gain access to real estate in a variety of ways, and through many routes to market. Many of these institutions have large internal teams able to source and manage direct real estate exposure, and 86% will invest directly in the asset class. 64% of SWFs invest in real estate through private funds, while listed real estate is a preference for 32%.
SWFs will continue to be big players in the coming years. The largest SWF in the world, Norway’s Government Pension Fund Global (Norges Bank Investment Management), has been very active in recent years, but its 1.6% current allocation is still a long way short of its 5% target. Other SWFs that are below their targeted exposure include Singapore’s GIC with an allocation of 7% of total assets and a target of 11%, and Korea Investment Corporation, which aims to grow its 2% allocation to real estate to 7%.
Many large SWFs make headlines through investment in trophy assets in major hubs, but as their level of real estate expertise grows, we are likely to see these institutions diversify to target a range of asset types and regions.
At a glance
Increase in the number of Japanese firms in the top 100. This year, four Japan-based real estate companies, with $137bn of assets, made it onto the list
Number of spaces at the top of the list that are held by North American-headquartered firms
Minimum value of total assets needed
to feature in the top 100 – $1bn more than last year
Number of spaces in the ranking held
by Asian firms
Value of assets held by the only Dutch company
Percentage of sovereign wealth funds globally that invest in real estate
Amount of money the world’s top 15 SWFs have allocated to real estate