Norway’s sovereign wealth fund Norges Bank IM said that its property portfolio delivered a negative return of 5% over the year 2020, compared to a total positive performance of 12.1% across its entire portfolio.
In a year characterised by uncertainty and major fluctuations, NBIM’s unlisted real estate returned a negative 0.1% while listed real estate went down by 14.9%.
The fund, which today is one of the world’s largest property investors with a portfolio of SEK 273 bn (€26 bn), said that its overall return in 2020 was the second highest since 1998 measured in kroner.
‘The market fell sharply in the first quarter, before quickly recovering in the second quarter. The whole year has been characterised by major fluctuations in the market, and big differences between different sectors,’ said CEO of Norges Bank Investment Management Nicolai Tangen.
NBIM decided back in 2010 to invest up to 5% of its portfolio in real estate. The fund has reported ‘higher-than-expected returns’ of 7.7% after costs from real estate since it began investing in the sector 10 years ago.
The figure compares to overall returns of roughly 5% for overall investments for the past 10 years.
NBIM’s real estate investments were initially focused on well-developed European markets, with the mandate broadened to include countries globally from 2013. The fund’s first investment was the acquisition in 2010 of a 25% stake in The Crown Estate's properties in Regent Street in London.
In 2011, the fund entered France with the purchase of a 50% stake in seven properties in and around Paris from AXA Group. NBIM expanded from office and retail into logistics in 2012, and made its first investment without a partner in 2014.
The fund had a value of NOK 10,914 bn as at 31 December 2020, of which 72.8% invested in equities, 2.5% in unlisted real estate, and 24.7% in fixed income.
