Sovereign funds eye $725 bln property spree-CBRE

LONDON, Sept 23 (Reuters) - Sovereign wealth funds (SWF) could invest as much as $725 billion in global commercial real estate by end-2015, a report published by the world's biggest property consultant CB Richard Ellis (CBG.N) said on Tuesday.

While already big players in the international property market, CB Richard Ellis (CBRE) said SWF allocations to the sector could rise to around 7 percent of their total assets over the next seven years.

With nearly $4 trillion of total assets currently under sovereign wealth fund control, a 7 percent allocation would bring total worldwide commercial real estate investments to $280 billion, the report estimates.

CBRE estimated that the SWFs could reach total assets of $12 trillion by 2015. A 7 percent allocation implies SWFs would make approximately $725 billion of net property investments over the next seven years.

"Given that the real estate sector's investment characteristics -- current income combined with long-term appreciation -- closely match SWF requirements, we expect them to increase their weighting of commercial property," Ray Torto, chief global economist at CBRE said.

In order to achieve a 7 percent target allocation, SWFs will need to branch out of familiar markets in the United States and Middle East and diversify future investments widely across territories, companies and investment vehicles, CBRE said.

New destinations are expected to include Japan, the UK and other countries with currencies not already held in the SWFs foreign reserves. Funds might also invest in property shares and debt to broaden their exposure.

"It is also very possible that we will see outright acquisitions of property companies, listed and unlisted, as a way of assembling a significant direct real estate portfolio rapidly as well as acquiring the property management infrastructure to go with it," said Michael Haddock, director in CBRE's EMEA research team. (Reporting by Sinead Cruise; Editing by Hans Peters) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)