What was once a major source of capital in commercial real estate across the globe has shrunk dramatically this year.

Sovereign wealth funds, state-owned investment vehicles such as the Qatar Investment Authority and China Investment Corp., have only spent $3.6B worldwide on income-producing real estate, according to a report by RCA Insights. They accounted for more than $30B of real estate investment in 2017.

The amount of foreign capital spent this year is not just low, it is more than $17B less than in any year since 2011, and the second-lowest in the last decade. Only 2010, just after the nadir of the Great Recession, saw less sovereign wealth fund, or SWF, investment.

Political realities have made a major impact on investment attitudes, RCA said, with QIA growing more conservative in the wake of regional conflict with Saudi Arabia and other neighbors. Qatar's national bank had to spend nearly $40B to prop up the nation's economy in the first two months of that diplomatic crisis, the Financial Times reported.

A trade war between the United States and China has predictably cooled the Eastern giant's investment appetite, but China's new restrictions on overseas investment have been doing damage in that area since they were announced last year. Although amendments to that policy have been made that might mitigate the situation somewhat, a former CIC executive is not optimistic, believing that the government directive has not encouraged CIC and China's other SWF, State Administration of Foreign Exchange, to look for loopholes.

Though a report from analytics firm Preqin in May found that SWFs are seeking to increase their real estate holdings, it appears the reality on the ground has taken precedence over the funds' desires. RCA noted that while SWFs take a long view toward investing and tend not to be beholden to cyclical trends, the maturity of the current cycle, with yields at a multiyear low, could be another deterrent.