REAL ESTATE - Real estate boosted the performance of Denmark’s largest pension fund, Arbejdsmarkedets Tillægspension, which last week reported overall half-year returns of DKK5bn.

In a statement, the pension fund attributed the return in part to a high return on real estate. Against an overall return of 1.7% and 3.6% on domestic and overseas equities, real estate returned 5.1%.

However, Michael Nielsen, CEO of Ejendomme, the pension fund’s wholly-owned but separately managed property subsidiary, said it would be difficult to up the real estate allocation from the currently low 3%.

“We’re working hard to increase it,” he said, “but as an asset class real estate is not so liquid and we haven’t been able to follow up real estate in the same way we have growth in equities and bonds.”

In any case, he said the fund was “most likely” to focus any additional allocation on indirect investment in global funds. ATP’s direct property investments are concentrated in the Danish commercial – mainly retail and office – market.

“The question is: where do you increase the allocation?” he said. “The Danish market has been very competitive in the last two or three years and it’s difficult to increase our exposure. Instead, we’re looking outside Denmark at indirect investment, including in unquoted property funds.”

He added: “We’re looking for any good opportunity.”

The fund’s reserves totalled DKK56.6bn at the end of June.