The Norway Sovereign Wealth Fund, the largest in the world, has just announced its entry on the US real estate investment market. The $660 billion fund plans to invest $11 billion in several countries, including the USA, targeting large Class A office complexes and other conservative property assets in major cities and developed malls.
The investment in US property will be of about 3.6 billion, a third of the sum they plan to invest, meaning Amrican real estate will represent 1.7% of the fund. In the following years, the Norway Sovereign Wealth Fund plans to invest 5% of its total assets ($135 billion) in global real estate markets, but has not yet decided which percentage of future investments will be directed to the US.
The fund has already added commercial property in London, Paris, Frankfurt, Berlin and Sheffield in the United Kingdom to their portfolio. They have also entered the Swiss market by purchasing a Zurich office complex from Credit Suisse Group AG, a deal valued at 1 billion Swiss francs ($1.08 billion).
The newly announced investment in the US will be overseen by Yngve Slyngstad, chief executive officer of Oslo-based Norges Bank Investment Management. He also explained that the fund currently held 0.3% in real estate, 60.3% in stocks and 39.4 % in bonds as of the end of September 2012.
The fund is currently targeting investments in the real estate segment in an attempt of generating higher returns for investors. Last month’s return was of 4.7%, following a 2.2% decline in the previous three months.