The Abu Dhabi Investment Authority (ADIA) has been taking advantage of “abundant liquidity” in global real estate markets to sell assets and reposition its portfolio.
The sovereign wealth fund, which tops IP Real Estate’s Top 100 Global Investors list, has been selling “selectively” in the US and Europe, according to its annual report.
“Abundant liquidity made finding attractive investments more challenging, but also created opportunities to selectively dispose of assets and generate value through active asset management,” it said.
ADIA has been selling assets in the US and redeploying capital “where the long-term risk-reward trade-off was most attractive”, including Brazil and Mexico.
The investor said it had “focused on managing its existing European portfolio” while “selling into the strong investor demand for property”.
It warned: “Until the outlook for occupier demand improves, the risk remains that income for many properties may ultimately decline as leases are renewaed at lower rates.”
ADIA highlighted the UK as a stand-out market “where conditions in London are similar to – if not stronger than – those in the major US cities”. But it noted that “investor demand for yield” had created a “highly competitive” market.
The sovereign wealth fund also revealed it has been building up its in-house infrastructure expertise and planned to hire more staff for the asset class this year.
“The build-out of ADIA’s real estate team over recent years has positioned the organisation to be active in the debt and equity space across a wide range of markets and property types,” it said.
“Internally, the infrastructure team implemented a new organisational design, focused on sector specialisations coupled with geographical responsibilities.
“A number of new appointments were made during the year, with further selective recruitment expected in 2015.”
