REAL ESTATE - Economic growth could prove just as big a risk to real estate investors as slowdown, according to Finnish pension fund Ilmarinen.

Against a buoyant Finnish economy, year-end results revealed that Ilmarinen’s €2.1bn real estate portfolio posted a return of 5.3% and a return on directly owned property of 4.7%. The return on indirect real estate investments was 23.6%.

Yet in a comment on the results the multi-employer pension fund identified a “new risk factor” in global real estate price increases driven by low interest rates.

“As a considerable part of real estate purchases are financed with liabilities, both the acceleration of economic growth and its slowdown create a risk to the value of real estates in their own way,” said a comment on the results.

Meanwhile, Finnish local government pension fund KEVA plans to up its real estate holding by 2% to 9% as part of a wider restructuring of its portfolio away from fixed income.

Subject to trustee approval, the restructuring will in the next few months also increase the €20bn fund’s equity allocation by 15% to 60%.

Driven by low interest rates, this will be the first phase of restructuring in a long-term strategy to revamp the fund’s portfolio.

Finnish retail proved attractive to investors elsewhere in the region. Denmark’s Ejendomsinvest paid €25m to Finnish OP-pension fund for four retail properties in south and west Finland, bringing its total real estate investment in the country to €200m.

The acquisitions, which are rented to national retail chains on mid-term leases, are for new Finnish real estate fund that will also purchase shares in real estate companies. A spokesman for the firm said it was primarily interested in retail but would consider other sectors “if the location and tenant are right”.