New | Norway’s state fund may invest US$4b on global property in 2015
Sovereign wealth fund already owns property in New York, London, Paris and Berlin - with Singapore and Tokyo the target for future investments
Norway's US$860 billion sovereign wealth fund may invest more than US$4 billion in property worldwide this year, breaking the record it set last year, its chief executive said, as the fund builds up its portfolio of real estate.
The fund invests Norway's revenues from oil and gas production in stocks, bonds and property. The latter - mostly commercial real estate - represented 3 per cent of the fund's total value at the end of the third quarter but will reach 5 per cent over time.
Last year, the fund invested a record 36 billion crowns (HK$32.1 billion) in net real estate purchases, CEO Yngve Slyngstad told a seminar on Friday, and may be on track this year to do more.
“This year we are still below our record of 36 billion last year, but there is ... potential that we will actually pass it,” he said. The fund has so far invested some 28 billion crowns in property in 2015, he said.
Separately, the fund said in a discussion paper published early on Friday that it may be desirable to invest up to 15 per cent of the fund's value in property.
“The vast majority of academic studies comes to the conclusion that adding real estate does improve the risk-return profile of a mixed-asset portfolio,” the note said. “The median range of the suggested allocations to real estate in the 30 studies reviewed was 15 per cent.”