Given the vast wealth controlled by sovereign wealth funds, it is little wonder that they are among the largest investors in European property. Exactly how large has been revealed by property agent Savills, which says SWFs invested a total of €5.5 billion in 2013 – an increase of 30 percent on €4.2 billion the previous year.
Savills was not at liberty to divulge details of all the transactions it had counted, but it noted that there were five SFWs from the Middle East and the Asia-Pacific region among the top investors in Europe. That said, SWFs were involved in just nine transactions, meaning that the average deal size was a whopping €700 million. That is quite the jump from an average deal size of €247 million in 2012, although two were portfolio purchases.
The Qatar Investment Authority (QIA) appears in the top 5 among all types of buyers in Italy, France and Spain. Meanwhile, SWFs from Kuwait and Abu Dhabi were at the top of the order in the UK and France, respectively.
Total transaction volume, however, appears to be inflated by one transaction. That would be the €2 billion acquisition of the More London office complex by St Martins Property Group, the UK property subsidiary of Kuwait. Apart from that landmark deal and the Porto Nuova in Milan, the most significant deals in Europe include QIA buying a retail property on the Champs Elysees for €515 million; Qatari Diar buying the W Hotel in Barcelona for €200 million; and the Abu Dhabi Investment Authority buying a French office portfolio for €672 million.
Savills expects SWFs to record similar investment volumes in 2014, albeit partly from new countries. “Sovereign wealth funds tend to favor low-risk core assets and usually will only target investments of at least €200 million, which limits the markets in which they are active due to a lack of suitable stock,” said Marcus Lemli, head of European investment. “However, we have seen this investor type broaden its investment spectrum, looking for value in non-core deals as well as smaller lot sizes.”