Global public sector investors favour real estate, infrastructure

Singapore

WHILE central banks continued to purchase equities last year, sovereign wealth funds and public pension funds moved more aggressively into real estate and infrastructure projects in pursuit of higher returns in an ultra-low interest rate environment. And this is likely to persist, raising risks of asset price bubbles forming in the sector.

An Official Monetary and Financial Institutions Forum (OMFIF) survey of 500 global public sector investors with total assets of US$29.7 trillion - 1.8 per cent up from a year ago - found that 44 per cent of sovereign funds and public pension funds intend to shift more funds into the property sector in the next three to five years. Fifty per cent plan no change, and only 6 per cent intend to cut back allocation.