The creation of Hong Kong’s Future Fund could free up HKD68bn (€8.17bn) of capital to be invested in global real estate markets, according to CBRE.
The creation of the new sovereign wealth fund, due to be completed before the end of the year will “effectively double the size” of Hong Kong’s Long Term Growth Portfolio (LTGP) from HKD115bn to HKD225bn, CBRE said.
The LTGP currently invests around 30% of its capital in global real estate assets. If the Future Fund was to invest a similar proportion of its capital, its real estate holdings could gradually increase to HKD68bn.
Marcos Chan, head of research for CBRE Hong Kong, Macau and Taiwan, said the establishment of the Future Fund is an important step for Hong Kong to invest and save for future generations, reducing the risk of a structural deficit.
”Forming a management team, however, and honing in-house investment skills and expertise will likely take some time as staff will need to familiarise themselves with the market and formulate their own direct real estate investment strategy,” Chan said.
“So while real estate is expected to be an integral component of the new fund, it will be some time before it begins to deploy capital.”
Chan estimates it could be ”three to five years” before the fund assembles a sizeable portfolio of global real estate holdings.
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