NORWAY - Norway's Government Pension Fund Global will begin to buy commercial property in the second half of this year and will focus on investing in the UK as part of its plans to invest £14.5bn (€15.7bn) in real estate in the coming years.

Europe's largest pension fund announced in April 2008 that it planned to switch 5% of its assets to real estate to improve risk diversification and enhance returns.

A spokeswoman for the pension fund said the fund was currently waiting to receive a mandate from the Norwegian parliament but declined to comment further.

Norges Bank Investment Manager (NBIM) announced last week it had lost a NOK633bn (€72.21bn) on investments in 2008 as a result of the sharp fall in global equity prices and the underperformance of bonds.

At the end of 2008, the fund had allocated 49.6% to equities but the pension fund has made changes to its investment strategy and increased its risk management capacity.

"We have reduced the absolute size of positions, especially on the fixed income side, to the extent possible," said Yngve Slyngstad, executive director of NBIM.

"We have also made significant changes to the mandate structure, especially for external fixed income management," he added.

Despite the losses, the market value of the fund was NOK2.275trn at the end of 2008, up from NOK2.019trn in 2007.

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