A sovereign wealth fund (SWF) is a state owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds control an estimated $3.85 trillion, which could expand to $12-15 trillion in the next by 20015, according to the International Monetary Fund.

They are on a shopping spree here in the US, buying major properties, investing in companies (Citigroup, Morgan Stanley, Bear Stearns, Merril Lynch, etc.)and eying our real estate markets here in Los Angeles and around the US.

With a barrel of oil selling for $124. currently and our real estate markets devaluations and as capital becomes more constrained such funds will be making major investments in the Las Vegas real estate market and in other major cities around the US.

The world has approximately 50 sovereign wealth fund, in 35 countries, with approximately 10-15% of their total assets going into real estate. The richest funds include Abu Dubai Investment Authority ($875 billion), and Norway’s Government Pension Fund, with assets of $322 billion. Some of the world’s largest funds include Singapore Temasek Holdings, the China Investment Fund and Dubai International Corp.

With a barrel of oil continuing to sell for $124., you can expect these sovereign wealth funds to to grow and invest further in large residential community properties and further investments in commercial real estate across America that trails their initial investments in NYC Commercial Real Estate, including the Essex House, the Plaza Hotel, Fairmont Raffles Hotels - if you look to our local area, the Mirage Resorts Hotel secured a $5 billion investment from a sovereign investment fund and the Orient Express Hotel is 9.2% owned by a sovereign investment fund as well.

What are these implications in terms of sovereign wealth funds making more aggressive investments in the Las Vegas real estate market and across the United States? No one knows - but we do know these funds have massive amounts of capital and the “cheap dollar” makes our real estate extremely attractive to them for purchase or investment. We anticipated these funds moving more aggressively into major markets around the the US, including the Las Vegas Real estate market.

We know these funds have always been attracted to high visibility “trophy types” of properties. But, their interest could diversify more into larger blocks of retail projects, including large groups of homes, as the trophy properties are snapped up. But for better or worse, these funds are starting to aggressively move into the Las Vegas Real estate market and we are sure are looking at more properties.

Filed under: Best Foreclosure Buys, LAS VEGAS MARKET, LIFE AND PASSION