Norway’s NOK12.8trn (€1.2trn) sovereign wealth fund will be able to invest up 7% of its assets in real estate over the next three years.
Norges Bank Investment Management (NBIM), which manages Government Pension Fund Global (GPFG), said it will target an allocation range of 3% to 7%, combing both listed and unlisted investments.
Its previous strategy plan, released in April 2021 and covering 2021 and 2022, targeted a real estate allocation of up to 5%.
NBIM said in its Strategy 2025 document, which covers the years 2023 to 2025, that it would use the flexibility to access growing sectors and segments in a cost-efficient way.
“We will enhance return by using the liquidity in the combined strategy to exploit periods of disruptions in real estate markets,” it said.
Looking ahead to the next three years, the manager also said: “We expect to pursue more development projects in the coming years to adapt our investments to increased demand for energy efficiency and flexibility in buildings.”
In order to access the most attractive assets at acceptable risk, NBIM said, it would will invest “alongside best-in-class investment partners with a proven development track record”.
The latest strategy plan – the first of the sovereign wealth fund’ medium-term plans to be fully conceived under the leadership of chief executive Nicolai Tangen – cites a range of areas across asset classes where NBIM believes it can add extra return through active management.
Recently, GPFG has been investing in renewable energy infrastructure and NBIM said it would continue to build a portfolio of “high-quality” mainly wind and solar power assets.
NBIM said it would investigate new opportunities related to the energy transition and consider investments in the storage and transmission of renewable energy.
It also said: “We will consider investing in funds for renewable energy infrastructure to explore new markets and technologies.”
So far, NBIM has only made one unlisted infrastructure investment, putting €1.37bn into half of the Dutch offshore wind farm Borssele 1 & 2 in April 2021.