Denmark’s ATP says it would like to add “many billions” of kroner in real estate and infrastructure assets to its portfolio – but has been reluctant to invest recently due to concerns about overpricing.

Reporting annual investment results, the pension fund said its real estate investments produced a DKK2.1bn (€282m) return in 2016, with the portfolio valued at DKK34.4bn at the end of the year.

Meanwhile, infrastructure investments generated a DKK700m return and the portfolio was worth DKK15.4bn at the end of 2016.

The property return undercuts the 2015 profit of DKK2.8bn.

ATP’s new chief executive Christian Hyldahl told IPE Real Estate: “We would like to invest more, and many billions in infrastructure and property, and we have room in our risk budget to add more illiquid investments.”

Despite making DKK2bn in new real estate investments in 2016, the £759bn (€102bn) pension fund had been reluctant to enter deals recently, preferring to wait to see how prices developed, with some properties in Denmark seen as expensive, he said.

“We do a lot of stress testing on how much we can tolerate in terms of illiquid investments, and how liquidity would be under many different scenarios,” Hyldahl said.

“We have thought about this and we would still like to have more, but they have to give us the right returns.

“If we can get the same return with listed investments, for example, then we should take those liquid investments, because you should always get a premium for the illiquidity,” he said.

Last year, ATP made new infrastructure investments worth DKK1.9bn.

ATP’s real estate investments are split between directly-held assets, and indirect investments in unlisted funds and joint ventures.

At the end of 2016, direct investments in the portfolio were worth DKK25.1bn, and indirect investments were valued at DKK9.3bn.

Direct investments returned DKK1.6bn during the year, including valuation adjustments totalling DKK500m, while indirect investments produced a return of DKK500m, including valuation changes of DKK200m.

ATP said the 2016 real estate return had been boosted by rising property prices in Europe and Denmark, and to a lesser extent, in the US.

At then end of 2016, 67% of the portfolio assets were Danish, 27% located elsewhere in Europe and just 6% in the rest of the world.

The pension fund said in its annual report that the return on infrastructure investments had been gained across the different sectors in its portfolio.

ATP said it made new direct investments in the transport and distribution sectors last year.