AMF turns to development as investment opportunities dry up

AMF, one of the largest pension funds in Sweden, is turning to development as a way of increasing its exposure to real estate amid the current dearth of suitable investment assets in its main market Stockholm. AFM aims to boost its investments in property to between 10% and 15% of its overall EUR 41 bn portfolio from 8% at present but the lack of suitable standing assets is limiting its ability to grow by acquisition, Mats Hederos, head of property at AMF Fastigheter, told PropertyEU.

AMF Fastigheter, the real estate arm of the pension fund, is currently working on two office projects as well as MOOD Stockholm and another retail scheme. Two schemes will be in management in a few months, after which AMF will embark on two more, ensuring that three-four developments are under way at all times.

AMF owns about 560,000 m² of commercial property located mainly in the centre of Stockholm and valued at EUR 2.3 bn. ‘This corresponds to about 8% of the pension fund’s overall portfolio and we aim for between 10-15%,’ Hederos said. He noted that Swedish institutions have been actively increasing their investments in domestic real estate of late due to the strong performance of the Swedish market. ‘The Swedish market has performed excellently and we have even been a little bit surprised by how strong it is.’

MOOD Stockholm is one of the few speculative developments in the city at the moment. Set to open in spring 2012, it will comprise around 60 retail and leisure units split over three zones covering 10,400-m² in a former H&M office located in the city’s financial district. Six floors of offices will sit on top of the retail component. AMF describes MOOD as an innovative concept that will fill a gap in the retail offering in Stockholm

Karolin Forsling, head of retail at AMF Fastigheter, said AMF drew inspiration for the scheme from hotels and airports. 'To find inspiration we didn’t go to other shopping centres. Instead we went to airports because airports are good at handing people on the move.' MOOD has a three-zone structure: Everyday for exclusive but affordable brands; Wishing for high-end brands and Desire for exclusive, luxury brands. For its food offering AMF has signed up three of Sweden’s top chefs, including two with Michelin stars, leading to the leasing of the entire restaurant element of the scheme.

The scheme also includes two 250-m² open-air gardens on the first floor, interactive art works and rentable tree-house meeting rooms. Forsling: ‘Thinking about future trends in working and offices we looked at hotel lobbies as people are increasingly looking to hold meetings outside the office.’ Around 10 million people a year are expected to pass through MOOD, which is located between two major subway stations.

Forsling said that AMF is in the middle of the letting process for the scheme. ‘Letting is going quite well as the market is very interested in what we are doing.’