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ADIA’s China bets help keep it on top

Abu Dhabi Investment Authority continues to top the ranking

The $828 billion investor remains positive on the outlook of emerging markets such as China, India and Latin America, where urbanization, a growing middle class and increased consumption are expected to drive growth.

In particular, ADIA has been investing in China actively, increasing its real estate exposure in the country by 30 percent in the past two years. Within that timeframe, ADIA became the largest investor in Hong Kong-based manager Gaw Capital’s $1.3 billion Chinese data center platform. It also made a $750 million follow-on commitment to the Chinese logistics market with logistics specialist Prologis, bringing its total commitment to the firm in China to approximately $3 billion since 2011.

Allianz Real Estate’s rapid expansion

Allianz Real Estate first made it to the top 10 in 2016 and has since become a mainstay of the top five

The insurer has grown its AUM significantly from approximately €45 billion to over €70 billion today, partly due to its rapid expansion into new markets such as Asia-Pacific. The firm first started investing in Asia in 2016 and has built €3.5 billion assets in the region. It started small by doing fund investments, using side-cars and joint ventures, then direct investments.

In terms of strategy, the investor favors logistics and residential sectors in both Europe and Asia-Pacific. In the past year, it directly acquired a €1.1 billion multifamily portfolio in Japan from Blackstone and partnered with Australian manager Charter Hall to purchase the German supermarket chain ALDI’s distribution centers in Australia for $435 million.

CPPIB falls

A mainstay in the top 10 since 2015, the Canada Pension Plan Investment Board has slipped to 11th place after its real estate assets dropped in value by 7.5 percent year-on-year

Despite new investments and an increase in the value of its office and industrial assets, the change in portfolio value was offset by the return of capital from sales, according to its latest annual report.

CPPIB has 80.4 percent of its allocation in developed markets, such as the US, UK, Canada and Australia, and 19.6 percent in emerging markets including Greater China, India and Brazil. CPPIB will continue to be positive in emerging markets, where it has most recently ventured into Brazil’s multifamily sector through traditional joint venture arrangements. It partnered with Cyrela Brazil Realty for an initial allocation of up to $188 million to develop residential real estate in the country.

North American pensions fade

Back in 2015, half the ranking’s top 10 investors were North American pensions

But the group has slowly slipped in the ranking and only two appear on this year’s top 10: California State Teachers’ Retirement System and California Public Employees’ Retirement System. Also, no Canadian pensions made the top 10 after CPPIB fell off the list.

Still, this year sees CalSTRS reappear for the first time since 2016 after its real estate holdings increased by 7.8 percent year-on-year. That should grow, as it is planning to boost its target from 13 percent to 14 percent, per its latest financial report published in July.

Insurers climbing up the league

Today, insurers take three top 10 places, all of which are headquartered in Europe

AXA Investment Managers was the only insurer in the top 10 in 2015, but it was soon joined by Allianz Real Estate, TIAA and Swiss Life in 2016, 2017 and 2018, respectively. Among the top insurers, not only does Allianz have an ambitious target in growing its real estate portfolio, Swiss Life has also been raising its allocation target over the past two years.

This year, both Allianz and Swiss Life have made a major jump in RE holdings year-on-year, climbing around 17 percent and 13 percent, respectively.