The New Mexico State Investment Council is to allocate $300m-400m (€320.9m) to real estate funds next year.

Vince Smith, deputy investment officer for New Mexico, said most of the capital will be placed in a non-core strategy.

“I think that we are pretty set with our core manager lineup,” Smith said.

New Mexico will focus on offshore strategies to complement its US-based portfolio, with additional capital allocated to investments Europe.

“We have already made some commitments to funds in Europe,” Smith said. “Our belief is that this region is still in a recovery cycle, which will create some attractive investment opportunities.”

The $19bn sovereign wealth fund will allocate to both its existing and new managers, with commitments to niche managers, similar to its recent $50m allocation to the Almanac Realty Securities VII.

“Their strategy of supplying growth capital for real estate operating companies is one that we don’t have with any other manager,” Smith said. ”This gives us a different layer of diversification for our portfolio.”

The commitment was the fund’s third to Almanac Realty Investors and follows a $50m commitment to Almanac Realty Securities VI.

The opportunities will be presented to New Mexico by its real estate consultant, The Townsend Group. The sovereign wealth fund typically makes commitments between $50m-75m.