Norway’s sovereign wealth fund (SWF) expressed optimism at its annual press conference about its ability to buy up both real estate and renewable energy infrastructure assets at current low prices, seeing an edge over other big investors.
In preliminary 2024 results for the Government Pension Fund Global (GPFG), its manager Norges Bank Investment Management (NBIM), reported a 13% overall return which had been weighed down by real assets losses.
Unlisted real estate - 1.8% of the GPFG’s NOK19.7trn (€1.7trn) value at the end of December - made a loss of 1% in 2024 for NBIM, although listed real estate produced a positive 10% return, which NBIM said put its overall return for property last year at 5%.
Unlisted renewable energy infrastructure left the fund with a 10% loss in 2024, with the asset class making up just 0.1% of the GPFG.
At the press conference in Oslo, John McCarthy, NBIM’s head of US unlisted real estate, said, via video link, that “2024 marked a turning point for most real estate markets”.
After two years of declining property markets, particularly for office, he said, some good news began to emerge in the second half of 2024, suggesting that things were starting to stabilise.
“While some uncertainties remain about the economy, we’re carefully starting to invest more in real estate again,” McCarthy said. “We’re focused on high-quality office buildings, warehouses and retail buildings that are now selling for lower prices.”
He said NBIM had recently invested about $4bn in property, citing the SWF’s move to increase its ownership stake in eight office buildings in Boston, Washington and San Francisco from TIAA subsidiaries.
“While many investors are staying away from office buildings, we saw this as a good opportunity to buy high-quality buildings at attractive prices.
“We believe we will benefit from buying property now while other large investors are less able to do so,” he said.
Meanwhile, Harald von Heyen, head of unlisted renewable energy infrastructure, said large-cap renewable stocks had a “difficult” year in 2024, both in absolute terms and relative to the broader stock market.
This has reflected general sentiment around renewables in 2024, he said, despite record volume growth in global renewable energy capacity during the year.
“The negative developments in both public and partly private valuations are mainly caused by a rising-interest-rate environment, but also a failure in the industry to deliver on even higher growth expectations,” said von Heyen, adding that there had also been a stronger focus from customers on security of baseload supply.
“For us, though, this is good news as we have deliberately kept most of our powder dry,” he said.
“We have deployed less than 10% of our renewable-energy infrastructure mandate so far. We now see opportunities to enter into the ownership of more favourably priced assets in the coming years,” von Heyen said.
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