DENMARK - Danish pension funds FSP Pension and Lærernes Pension have teamed up to invest nearly DKK400m (€53.7m) in a new residential property development in Denmark.

In a joint statement, the funds said the investment in residential property came as part of their general risk diversification strategy.

Construction on the development, called Emiliendalen and located on the edge of Denmark's second-largest city of Århus, will start in the fourth quarter of this year and is scheduled to finish in spring 2012.

The pension funds are buying the project from the KPC group, which they said was very experienced with residential developments.

Lettings will be done on a commercial basis, but members of both pension funds will have priority as potential tenants.

Of the two funds, FSP currently has the heavier allocation to real estate.

At the end of June, Lærernes Pension held DKK631mn in property, out of total investment assets of DKK40.6bn, putting its property allocation at 1.5%.

FSP Pension held 12% of its DKK23.6bn in total assets in property at the half-year stage.