NORWAY - The Norway Government Pension Fund's appointment of State Street as real estate fund administrator, including joint venture services, has led to speculation that the sovereign wealth vehicle will invest directly in global property markets.

The NOK140bn (€16.6bn) will begin constructing its real estate portfolio in September - following changes in legislation enabling it to gain exposure to the asset class (see earlier IPE Real Estate article: Europe's biggest pension fund given top-line real estate guidelines)
 - and Norges Bank Investment Management (NBIM), which manages the fund, has appointed State Street to provide fund administration services.

Both State Street and NBIM declined to comment on the reasons for the appointment. However, as well as providing reporting and accounting services for the mandate, State Street will also help the NOK2.6trn fund structure joint ventures.

The scheme had previously indicated that it would only invest in indexed, geographically diversified, non-listed funds in mature markets. However, the inclusion of joint ventures within the administration contract indicates that incoming property manager Karsten Kallevig might consider investing directly.

Asked today whether the clause indicated a likelihood of direct investment, NBIM spokesman Øystein Sjølie said: "Yes, I suppose it does." He added that the real estate strategy was "not set in stone".

Elroy Dimson, professor emeritus at London Business School, recently speculated that the sheer size of the fund would prevent it from investing exclusively indirectly. The question was not whether but when, he said.

However, Morten Kampli, a partner in Norwegian fund manager Realkapital, predicted that it would be unlikely to invest in trophy assets - unlike other sovereign wealth funds.