Norges property investments achieved 10.4% return in 2014

Real estate was the best performing asset class for the giant Norway Government Pension Fund Global in 2014.

The 2014 report published by the fund, manager, Norges Bank Investment Management (NBIM), records a real estate return of 10.4% from its NOK 106 bn (€12 bn) of direct real estate investments at end-2014. In monetary terms this return equates to NOK 14 bn (€1.6 bn), compared with NOK 5 bn last year.

The US was the strongest region as Norges' real estate there returned 16.1%. UK property returned 15.8%, while the rest of Europe returned 3.7%. The fund's property holdings in other regions recorded a negative return (- 10.9%).

Norges also had NOK 33 bn of investments in listed real estate, and this segment returned 9.6% in 2014.

Real estate was the strongest performing asset class the oil-fuelled fund, even though it remains the smallest of its three investment asset pool of NOK 6,431 bn (€745 bn). Equity investments, which account for 61.3% of the total, returned 7.9% while fixed-income investments, which make up 36.5%, returned 6.9%.

The fund achieved an overall return of 7.6% or NOK 544 bn (€61 bn).

The share of the fund invested in real estate climbed to 2.2%, in keeping with its strategy to raise the proportion to 5% in the next few years. A separate leader group has been created to manage its property investments.

Yngve Slyngstad, CEO of Norges Bank Investment Management, said: ‘2014 was a good year for the fund, with positive results for all its asset classes. Strong stock markets in the first half of the year and falling yields made a positive contribution to the results.

‘Never before have we made as many property investments as we did last year, and we will continue to step up these investments in the coming years.’