The managers of the $682 billion fund managing Norway’s oil wealth, after two years of investing on the top real estate market in Europe, are determined to make it big in the U.S. real estate for which they are willing to reach deep into their pockets, writes The Wall Street Journal.
The Government Pension Fund – Global (formerly The Government Petroleum Fund) – the largest sovereign wealth fund in the world of wealth management – had talks in recent months with potential partners in New York, Washington and Boston. Thursday, the Norwegian government gave the fund manager, Norges Bank Investment Management (NBIM), green light for spending.
Karsten Kallevig, the real estate investment manager, said the fund could start the first real estate business in the U.S. in the first quarter of next year, eyeing top real estate or office space.
The fund comes to the U.S. the at a time when the real estate values in the New York market and other large cities are considered to be high and a wave of foreign investors, including from China, are interested in purchasing. Market players say that Norway’s appetite for expensive properties and the long-term profit perspective might help NBIM to find success on the largest real estate market in the world.
Although prices are high, investors say that a strategy similar to that adopted by Norwegians generally had success in major American cities, where values are usually go up faster than the rest of the country.
“They are not necessarily looking for big profits to brag about. They are there to find a stable source of low-risk assets to meet the needs of the retirees,” said Michael Ashner, Winthrop Realty Trust analyst.
Norway has a lot of money to spend. Kallevig says that up to a third of the allocation for the $34.5 billion of the fund for real estate will be invested in the U.S.
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