FINLAND - The Finnish Neste Oil pension fund said it is considering investing outside its domestic property market as it looks towards completion of three new buildings in Keilaniemi, Espoo, to house its sponsor.
Such a move would follow an emerging trend among Finnish pension funds to bypass the weight of international capital coming into the market. Public sector pension fund Fennia plans to switch 30% of its 11% real estate allocation into overseas indirect property because of concerns about potential volatility in the Finnish market.
The €750m Neste Oil pension scheme has not revealed the cost of the investment in the three Espoo buildings, which it will own and lease to its sponsor.
However, Petri Pentti, chief financial officer at Neste Oil and chairman of the pension fund, said the project would boost its current real estate allocation of below 10% to close to its target of 15%.
Completion of the buildings, which broke ground in spring 2006, will be completed in early January 2008 while the pension scheme has also earmarked funds for the project from its current money-market allocation.
Asked whether the fund was likely to increase its target allocation, Pentti told IPE Real Estate: "We'll keep our eyes open. It is not impossible to imagine that we'll invest in more real estate, though whether that will be through funds or projects has yet to be decided. We could even invest in the international real estate market."
All the pension scheme's real estate investment to date has been in its domestic market but the scheme's board will meet later this year to draw up investment plans for 2008.
International capital is continuing to flow into the Finnish property market.
Swedish private equity firm Niam last week became the latest investor to announce it would set up an office in the capital, Helsinki - three years after it entered the market with the acquisition of a 92-building portfolio in what was then the market's largest property transaction. Niam has €700m in Finnish assets under management.