Norway's massive oil-fuelled pension fund grew its real estate portfolio at a faster rate than any other European retirement scheme during 2013.

Norway's massive oil-fuelled pension fund grew its real estate portfolio at a faster rate than any other European retirement scheme during 2013.

Norway Government Pension Fund Global rose from 15th place in the 2012 survey to the number 4 position in PropertyEU's 2013 pension fund survey, carried out as part of its annual Top Investors ranking.

Thanks to a string of joint venture transactions, the €596 bn Norse fund increased its global property portfolio to around €6 bn, or 1% of its overall investment portfolio of €596 bn at end-2013. The fund, which is managed by Norges Bank Investment Management (NBIM), started investing in direct property in 2010 and had a portfolio valued at €4 bn, or 0.07% of its overall €534 bn of investments in December 2012.

The fund reported an impressive return of 11.80% on its property portfolio in 2013, up from 5.77% the year before.

Norges was the only significant climber in the ranking as the heavyweight Dutch vehicles maintained a big lead over their peers despite a marginal drop in their property holdings. ABP, the Dutch civil service fund, is by far the largest real estate investor with a global portfolio of €32 bn, or 11% of its total investment AUM of €323 bn at end-2013. Dutch healthcare sector fund PZW had €15 bn of real estate in 2013, corresponding to 11% of its €137 bn of investments.

The PropertyEU survey covers some 50 funds which had total property holdings of €167 bn - 7.6% of their combined investment assets of €2.2 tln. Their real estate investment strategies are a wide mix of direct holdings, joint ventures, non-listed funds and listed property equities.

NBIM
Norges' last real estate transaction of 2013 was a joint venture agreed in December with American insurance giant MetLife to invest in prime office properties in key US markets. The initial investment to be held by the joint venture is One Financial Center in Boston, Massachusetts. The gross value of the 121,000 m2 asset is $700 mln (€509 mln). The net purchase price for Norway Government Pension Fund Global's 47.5% share is €238 mln.

A month earlier Norges teamed up with AXA Real Estate to acquire the 28-storey SZ tower in Munich for €164 mln. In March 2013 the Norwegian fund and Prologis completed a €2.4 bn transaction which established Prologis European Logistics Partners (PELP) to acquire logistics assets in key European markets.

NBIM restructured its team in August 2014, establishing a real estate leadership group to drive its aggressive strategy of growing its global real estate holdings to about €20 bn over the next two years. By the end of Q2 2014 the oil fund had €7.7 bn of property on its books and reported a 3% return on its real estate holdings, up from 1.99% in the first three months.

See more on the pension funds and their real estate investments in Top 100 Investors, published in October 2014