NewSovereign wealth funds step up their property investments in Asia-Pacific
HK hotels deal by Abu Dhabi Investment Authority highlights appetite for trophy assets
Sovereign wealth funds are stepping up their property investments to diversify their focus from listed equity assets.
Even though mainland China is an important market for the sovereign funds, they often still prefer developed markets for long-term returns.
"Obviously China is an important market for sovereign wealth funds but many of them, particularly the new entries to this region, would prefer more mature markets like Japan and Australia," said Ada Choi, senior director at CBRE Research, Asia Pacific.
"Hong Kong and Singapore are in the spotlight too but I think that activity will be driven by opportunities to access such prime properties," said Choi.
She said the funds are entering new markets by purchasing big ticket trophy assets, citing the recent acquisition of a number of Hong Kong hotels by the Abu Dhabi Investment Authority (ADIA) as an example.
On April 30, Hong Kong-listed New World Development (NWD) announced that the company and its controlling shareholder, Chow Tai Fook Enterprises, entered into an agreement with ADIA, one of the world's largest sovereign wealth funds, to establish a new joint venture company to own the Grand Hyatt Hong Kong and Renaissance Harbour View in Wan Chai and Hyatt Regency in Tsim Sha Tsui.