Norway’s oil fund to invest in Asian real estate

Norway’s sovereign fund, the world’s largest, plans in 2015 to start investing in real estate in Asia, Karsten Kallevig, its real estate chief, this month told Reuters.

Norway’s fund has bought just over $10 billion in properties in a handful of European and U.S. cities since 2010 but has been buying rapidly this year and aims to invest about 1 percent of its assets in property each year for the next several years.

In Asia, the fund will stick to investing in property in two cities. The two cities have not yet been selected.

“In Asia we have done a lot of work and we’ll probably pick two cities to start with, hopefully in 2015,” Kallevig said.

“In Asia there are more than two cities of interest but to do your job properly, you can’t start with more than two.”

Kallevig told Reuters that its real estate strategy had already yielded unexpectedly high returns.

New investments will increasingly be alone, without partners.

“The truth is that there’s not a single partner that has the capacity to invest as much as we would like to in a given market,” Kallevig said.

The fund will also broaden its portfolio after primarily buying high-end office space in key cities, though residential property is not high on its priority list.

“If we really understand these markets, then we should be able to understand the risk associated with taking on a vacant building, taking on a repositioning, a redevelopment, even a full ground-up development,” Kallevig said.

The real estate unit, which makes its commercial decisions from its New York and London offices, has grown to 60 people since its start in 2010 and could grow as big as 200 over time.

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