Norway SWF to Invest More Heavily in Real Estate

(November 4, 2010) — Norway’s central bank governor Svein Gjedrem said Tuesday that its Government Pension Fund Global will begin buying real estate in the near future, along with equities and fixed-income securities.

Norway has agreed to spend about $722 million for a 25% stake in the UK Crown Estate’s Regent Street properties in London — consisting of properties located on Regent Street. The deal represents the first real-estate investment by the oil-rich country’s sovereign wealth fund, according to a statement. In March, the government granted approval for the $520 billion fund to invest up to 5% of its assets in real estate.

“A move into real estate will strengthen the fund, which today is solely invested in stocks and bonds,” Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM).

NBIM, which manages the fund’s real estate investments, has agreed to buy a 150-year lease on the London portfolio, which consists of 113 buildings over 39 blocks.

Roger Bright, chief executive at The Crown Estate, said: “We are delighted one of the world’s largest sovereign wealth funds has chosen The Crown Estate and Regent Street for its first-ever property investment.

Other pensions and sovereign wealth funds have taken advantage of real estate investments worldwide. Sovereign wealth funds from countries including Qatar, Dubai and China have invested in London real estate to benefit from the market’s strength and the pound’s weakness, Bloomberg reported. And in its latest effort increase its overseas allocation, South Korea’s National Pension Service (NPS), the world’s fifth-largest pension with $263.4 billion in assets under management, revealed plans to invest $400 million in the Asian and Australian real-estate markets.