The pandemic appeared to pour cold water on the premium office and residential market as far as state-owned investors were concerned - but the situation could be shifting.
With remote working in vogue and e-commerce soaring while residential property prices stagnated, real estate acquisitions were increasingly geared towards logistics property. Indeed, this week was no exception with Canadian pension fund managers CPP Investments and British Columbia Investments’ real estate arm QuadReal Property pouring a further EUR1.7 billion into GLP Continental Europe Development Partners I, a logistics real estate platform created in 2018 now worth EUR4 billion.
Global SWF data shows that SOI direct investment in logistics property almost doubled in 2020 to US$8.9 billion, while investment in offices fell by a third to US$6.7 billion and in residential property fell 20% to US$2.3 billion. Investment in mixed developments, which tend to contain a significant residential element, dropped by three quarters to US$2.6 billion.
Yet, we are seeing a recent pick up in office and residential acquisitions, suggesting that long-term investors see some return in the sector. Indeed, SOI residential property investment so far this year is estimated at US$3.5 billion – 54% more than the whole of 2020 and already higher than any full-year result since 2016.
A Qatar-Singapore venture has added US$156 million to its property portfolio with the acquisition of properties in Paris in France and Hanoi in Vietnam. The purchases have been conducted via Ascott Serviced Residence Global Fund (ASRGF), a JV between Qatar Investment Authority (QIA) and Ascott, a subsidiary of CapitaLand which is 51% owned by Temasek. The Paris building is a 139-unit co-living block, while the Hanoi property has 364 units in the city’s central business district.
Meanwhile, Nightingale Properties and Wafra Capital Partners, a subsidiary of Kuwait Investment Authority (KIA), secured US$500 million of financing for acquisition and construction financing for 111 Wall Street in NYC. The partners acquired the leasehold for the 24-story building for US$175 million in January last year.