To improve access to affordable and equitable housing in the world, government entities need to establish partnerships with monetary authorities such as development banks and institutional investors, said Pedro Antonio Guazo Alonso.
Multiple construction solutions can be used to approach the so-called housing crisis, said the chief executive of the United Nations Joint Staff Pension Fund in a keynote for the Business Council for International Understanding on Sept. 23. But besides concrete and steel, “you have to be creative with the material” in place so that one can meet the criteria of sustainability, Guazo added.
“If you have the component of having sustainable housing solutions, that adds even more attractiveness for all institutions because all of us — insurance companies, pension funds, endowments and so on and so forth — we have a sense of adaptation to real estate,” he said. And “if it comes with impact” in the sense that these homes are affordable for the people they serve, then “we would be even more willing to invest.”
Formally known as the representative of the secretary-general for the investment of assets, Guazo oversees the intergovernmental organization’s $95.47 billion pension fund, which has a 8.5% target asset allocation to real estate.
Last week, he attended a conference for pension funds and sovereign wealth funds. Assuming all of the attending allocators had a similar target allocation between 8% and 10%, there would be $6 trillion in assets in total for real estate, he noted.
“I’m very optimistic that there’s a lot of capital out there,” Guazo added.
Among other asset classes in the private markets he sees as options, he pointed to private credit as a way to invest in land acquisition. While banks can invest in infrastructure loans, institutional investors can invest in those loans through private credit mechanisms. About 10% of the fund’s portfolio is invested in mortgages, he said.
The pension fund is also looking to deploy capital in emerging markets in the global south, but the key there is knowing that its investing in a place with “order and rule of law,” Guazo said. He pointed to regional development banks that “all have toolkits in order to support governance” in these areas.
Coinciding with the 79th United Nations General Assembly, the keynote was part of an event hosted in partnership with Nuveen at the $1.2 trillion investment firm’s New York office.
