Public sector investors plan to increase their exposure to real estate assets over the upcoming year
Independent think tank the Official Monetary and Financial Institutions Forum (OMFIF) has surveyed chief investment officers and reserve managers at 31 public sector institutions, such as central banks and sovereign funds, with total holdings estimated at $33 trillion.
Of the respondents, 24% intend to increase their allocations of real estate assets over the next 12 months and 37% aim to invest into infrastructure, whilst 36% plan to cut their share of government bonds.
The research highlights investors’ continued search for ‘real assets’, or assets that are illiquid and deliver steady, predictable returns, as opposed to more traditional instruments for capital growth, which tend to be more vulnerable to volatility, such as equity markets.
Writing in the OMFIF report, former president and CEO of the Federal Reserve Bank of Atlanta Dennis Lockhart, said investors’ shift in focus towards new asset classes “is a trend likely to persist for some time”.
David Green-Morgan, Global Capital Markets research director at JLL, also remarked on the results, claiming that with more investors opting for stable returns over volatility, the scale and variety of opportunities will continue to expand.
“[…] We have seen the nature of real estate investing broadening in developed market to encompass student housing, aged care, data centers and other niche sectors”, he noted.
“This has been more challenging in emerging markets, where much of the increase in investment has been into the traditional sectors, although residential development is one sector that has proved popular across all markets.”