Who is buying land now? – Institutional Funds

Sunday, November 1st, 2009

In the next part of the "Who is Buying Land Now" series, we'll talk about the big guys - the Institutional Funds. Big investors are already on the lookout.

Nearly two-thirds of real estate professionals surveyed last year by the international law firm Bryan Cave said they planned to invest abroad within the next 12 months. And institutional investors — which sank dizzying amounts of money into domestic REITs last year — are also increasing their exposure to international real estate.

Among those increasing allocations into global REITs is the California Public Employees’ Retirement System, known as CALPERS, the largest public pension fund with more than $200 billion in assets. At the same time, domestic REITs are acquiring more foreign property or forging partnerships. They include companies like ProLogis, the AMB Property Corporation and the Simon Property Group.

Some of the funds rolled out last year include the Franklin Global REIT fund, Cohen & Steers Asia Pacific Realty Shares and the ING International Real Estate fund. The first foreign real estate index fund — the Northern Global Real Estate Index fund from the Northern Trust Corporation — also made its debut, along with the first global real estate exchange-traded fund: the streetTracks International Real Estate E.T.F., from State Street Global Advisors.

Investors of all types can find property for sale with the help of brokers as well as through online commercial listing services like LoopNet.com and CoStar.com. Thomas P. Byrne, LoopNet’s president and chief operating officer, says undeveloped land makes up about 15 percent of his company’s 600,000 listings. CoStar’s chief executive, Andrew C. Florance, says 148,000 land listings are now on his site, totaling around six million acres, or “two times what it was two years ago.”

The floor under timberland is its long-term appreciation. That’s why pension funds, endowments, investors and trusts are putting money into it.

Tags: institutional investors, online commercial listing, property sales, property value, real estate professionals, REITs