Home ListingDecember 22, 2015

European Pensions Refocus on Property

Continental institutions’ interest in real assets shows no signs of abating.

Reported by Featured Author

Danica Pension has struck a deal with Aberdeen Asset Management to manage €1.3 billion ($1.4 billion) within its local property portfolio.

The mandate commences from February 1, 2016, and includes 107 residential and commercial properties in Denmark. It represents more than a third of Danica Pension’s €3.3 billion in real estate assets. The pension fund manages DKK 316 billion ($46.4 billion) in total.

As well as this mandate, Aberdeen will take over responsibility for €5 million of property development projects on behalf of Danica, the asset manager said in a statement.

“The aim will be to optimize the value of the property portfolio through active management, while the current property administrator will continue to be responsible for letting and administration,” Aberdeen said.

Separately, Sweden’s AP3 has established a joint venture with property specialist Balder in order to invest in residential real estate for the first time.

AP3 CEO Kerstin Hessius said there was a “great need for new housing” in Sweden to cater for the country’s growing population.

The venture should open for business in the first quarter of 2016, AP3 said in a statement, subject to regulatory approval.

The two deals follow a busy year for European institutional investors in the property sector.

In August, fellow Swedish pensions AP1 and AP2 teamed up with asset manager TIAA-CREF with the aim of investing up to €4 billion in real estate.

Norway’s Government Pension Fund—Global, the world’s biggest sovereign wealth fund, has been making its case for doubling (or even tripling) its targeted allocation to the asset class.

A survey of 600 investors by Colliers International found that 57% of European respondents planned to increase their allocation to property in 2016—although this was lower than the previous year’s figure of 64%.

At the end of March 2015, data firm Preqin estimated that $730 billion was invested in unlisted real estate globally, including $221 billion of unused cash. Of the $730 billion, 29% was focused on European assets.