The Real Deal New York

Much more sovereign wealth could be headed to NYC real estate

Two-thirds of sovereign funds want to increase their exposure to the industry: report

April 10, 2015 08:00AM
By Konrad Putzier

Khalifa Slyngstad

From left: Abu Dhabi’s Sheikh Khalifa bin Zayed Al Nahyan, 11 Times Square and Norges’ Yngve Slyngstad

Sovereign wealth funds made quite a splash in Manhattan real estate in 2014, with north of $2 billion in deals. But that may only be the beginning.

A growing number of government funds are looking to increase their investments in real estate worldwide, according to new data by research firm Preqin exclusively reviewed by The Real Deal. Combined with a marked growth in their balance sheets — since October 2013, sovereign wealth funds have increased their total assets from $5.38 trillion to $6.31 trillion — and New York’s attractiveness as an investment destination, this could mean more money is heading to the Big Apple.

The vast majority of sovereign wealth funds are looking to increase their exposure to real estate, according to Preqin.  All funds currently holding less than five percent of their assets in the form of bricks and mortar are looking to increase that share above five percent. An impressive 37 percent of sovereign wealth funds are planning to invest 10 to 15 percent of their total assets in real estate – a marked increase from the 14 percent that currently do.

New York real estate has been described as “a parking spot for global wealth,” due to its relative stability and ability to absorb large sums of money. In the past 12 months alone, sovereign funds have spent more than $2 billion on Manhattan commercial real estate, according to Real Capital Analytics. Norway’s Norges Bank Investment Management led the pack with investments of $1.74 billion, including stakes in the office buildings 11 Times Square and 601 Lexington Avenue. It was also in the running as a suitor for Blackstone’s 1095 Sixth Avenue, which ended up selling to Canadian investor Ivanhoe Cambridge for $2.2 billion.

Manhattan’s most recent sovereign buyer is the Abu Dhabi Investment Authority, which closed on the $337 million purchase of Ian Schrager’s New York Edition hotel at 5 Madison Avenue this week. The deal pushed the fund ahead of the Kuwait Finance House, which last year bought two Manhattan hotels, the Holiday Inn at 60 West 36th Street and the Hampton Inn at 231 East 43rd Street, for $146.5 million.

  • Lordyuyu

    good. this type of cash influx is a great stimulus. who cares if these apartments are empty – they are supporting thousands of construction jobs and increasing our tax coffers

  • Charles Dale

    Meanwhile affordable housing for the middle class people who actually live here is few and far between because humans care about MONEY , not people. They don’t care who the people with the money are, just that that they have money is what matters. Give middle class people millions of dollars and people will clammer all over them and treat them well. Take the millions away and who cares about them. We have made money our god a long, long time ago and it shows what we really are.

    • Marc

      You are wrong. You write like a communist because its apparent to me that you are one. If you are so concerned then maybe you should go build houses with Jimmy Carter. Nothing wrong with that and nothing wrong with people using their money to buy what they want but who are you to cast judgment?
      A free market system may not be perfect but it’s by a large margin the most perfect. It’s the best path to wealth for all. Poor people in this country live well in comparison to the whole world………..and that’s solely due to wealth created by our economic system and NOT govt forced programs and taxes which only decrease opportunity and make things worse for your “common folk”. You say to “Give middle class people millions of dollars” and who do you propose to do that? Where will the money come from?
      Isn’t 150 years of success only hampered by taxes & big government convincing enough?
      Isn’t 100+ years of communism/socialism and all its failures convincing enough? Communism created more poverty & deaths by war than anything in history. Why the hell you want that? Please go to Cuba where the Billionaire Castro brothers give out housing and health care like candy. Go there & live the good life.

      • Charles Dale

        You are wrong to. I am not a communist. I side more with Democrats but am registered as an Independent because sometimes Republicans are right and sometimes Democrats are right. I go with the person who is correct, not the party they are in. I like the ideas of Senator Elizabeth Warren. She has the support of many people who want her to run for president but she said she is not and I do not think she is ready yet either. When I said give the middle class millions, I did not mean to do so literally. My point was if they had millions, real estate agents and other people would fall over each other to help them but if they had just a little money, no one would really care about them to much.

        Cast judgement? No, just commenting on the situations I see. Many articles, by many different people, are being written over the past year how the income difference between the rich and poor is at it’s widest point now since the Great Depression and that is no good for the economy. How the middle class is becoming smaller and smaller even though a large middle class helps the economy chug along. How manufacturing jobs are now mostly overseas because of the cheaper labor and how the average college graduate is $30,000 in debt and are having a hard time finding a full time job with some benefits. How jobs being created are mostly part time jobs, close to minimum wage with little to no benefits and how the real unemployment rate is actually 24% since people who are no longer looking for work are no longer counted. How people working at Walmart, McDonalds and other low paying jobs for years, are on and need public assistance to go along with their salary to pay their bills.Yes, I have seen the price of everything lately and the gap between the rich and poor is at its widest point since the Great Depression. When the gap is that large, it is not good for the economy or the people with the exception of the top 1%. This will not end well unless something is done to bring the 2 extremes closer together. An article right at this website said that a lot of real estate in New York is being bought by rich, foreign nationals who do not even live in the condos and co-ops they buy but just use them as an investment and they remain empty for years even though somebody owns them. Meanwhile, the middle class and lower, who have lived here for years, can’t find affordable housing and an article written had an undercover reporter find that in homeless shelters, there are people who are there with full time jobs but they can’t find affordable housing. Story after story here reports about luxury buildings being built but very little for the middle class. We care about money, not people. Give poor people millions and real estate agents etc. would be falling all over them, take the money away and no one cares anymore. The money counts, not the person. We have made money our god long ago and it is no good.

    • Edward Johnson

      You’re wrong. Of the 2 million rental apartments in NYC, half of them are rent stabilized. The median rent of those apartments is $1,300/month. We also have over 100,000 units of section 8 housing and about 300,000 project housing.

      PLUS, if you are over 62 and make less than $50,000 then we pay your rent increases for the rest of your life and if you’re disabled the same deal –we pay your rent increases the rest of your life.

      We have loan grants to help people buy, we have HDFC programs that help people buy, we have subsidized borrowing rates to help people buy, we have LYNC and welfare, and food stamps, free phone programs, free meals, free shelters, earned income tax credits etc to help people. There are also more than 100 non-profits that help people with food, housing, job training, clothing, education etc..

      The median rent (what people actually pay) in NYC is less than $1,300/month. You couldn’t be more wrong when you say people “don’t care.”

      • Charles Dale

        Yes, I do know about all that you talk about here. All these programs are great and do help many people. It is a shame though that I still see many people looking for affordable housing in New York (in which I have lived all my life) and they have a very hard time finding any. Studio apt’s. in my area (Rego Park, Queens) rent for $1,200 a month minimum and others are $1,400, $1,500 for studios and that is when you can find rentals. They are rare and most everything are co-ops and condos.

        Yes, I have seen the price of everything lately and the gap between the rich and poor is at its widest point since the Great Depression. When the gap is that large, it is not good for the economy or the people with the exception of the top 1%. This will not end well unless something is done to bring the 2 extremes closer together. An article right at this website said that a lot of real estate in New York is being bought by rich, foreign nationals who do not even live in the condos, co-ops they buy but just use them as an investment and they remain empty for years even though somebody owns them. Meanwhile, the middle class and lower, who have lived here for years, can’t find affordable housing and an article written had an undercover reporter find that in homeless shelters, there are people who are there with full time jobs but they can’t find affordable housing. Story after story here reports about luxury buildings being built but very little for the middle class. We care about money, not people. Give poor people millions and real estate agents etc. would be falling all over them, take the money away and no one cares anymore. The money counts, not the person. We have made money our god long ago and it is no good. I do like all the programs that New York City has to help people with housing. It is just a shame that this is still a big problem here.

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