JUNE ISSUE: Where in the World …?
- Jun 01, 2014
Ron Dickerman, president & founder of Madison International Realty L.L.C., spoke with CPE editorial director Suzann Silverman about where real estate investment dollars are coming from and where they are being invested today.
Q. What countries’ investors do you find are most interested in commercial real estate right now?
A. Real estate has really become a structural component of almost any institutional real estate portfolio. If you walk into any institutional investor, no matter where they are, and you say, “What is your percentage allocation for real estate?” virtually everybody will have an answer. The other thing going on is real estate is becoming a larger component of what they do. So we’ve been seeing quite a lot of announcements of XYZ Pension Fund is raising their real estate allocation bucket from 6 percent to 9 percent or 8 percent to 12 percent. Those may sound like small movements, but when you’re talking about a $20 billion pension fund, that is a fair amount of capital. So that’s point one.
Point two: In a world where fixed income rates of return are very skinny, people have always looked at real estate as a current dividend-yielding play. I think that’s also driving the attractiveness of the asset class. What we’re starting to now see is lots of capital flowing from different points in the world–certainly coming from Asia, and within Asia, China, Korea, maybe a couple of points of Hong Kong. The Middle East has always been a big investor, both from the sovereign wealth funds and some of the private families and private capital. And then you’re seeing a little bit of money coming from Germany. We’ve seen some capital coming from pension funds who are in the United States who are trying to go direct.