FOREIGN FUNDS

July 13, 2010 | 8:00 am ET Staff Reporter

Sovereign wealth funds from Singapore to the Middle East have their eyes on the West as they seek to diversify their assets. The US is a prime target for long-term investment, but many Americans don't understand the funds' strategies, and low familiarity leads to low favorability, a recent Penn Schoen Berland/Hill & Knowlton survey shows.

The solution: Stewart Airport—wait, that's a different SWF. Hill & Knowlton SVP Jim Cox says SWFs, already embraced in developing countries, have to be more transparent and educate investment targets. His international communications consultancy firm has represented many of these funds, which are attracted to properties with depressed real estate values and lower occupancy rates. NYC has already garnered interest from SWFs—the Dubai Investment Group acquired the Essex House Hotel for $440M in ‘06, and Dubai-based Meraas Capital acquired a 20% stake in the GM Building in a JV with Boston Properties and Goldman Sachs in '08.

Overall, there's a greater familiarity with New York because it's friendly to international business and has the premier properties that SWFs want: long-range investments with cash flow and value upside, Jim says, including top hotels, office buildings, and residential apartment buildings. They have a strong outlook for the city's future, and believe the financial insecurity will pass, he adds. The NY mayor's office is also supportive of business investment, which helps make the city yet more attractive for SWFs. Above, Jim is pictured with H&K colleagues: (clockwise from Jim): Elena Kontalipos,Liz Cheek,Jessica Anderson, and Shannon Creamer.