Norway's oil fund books 3% property return in Q2

Norway's giant oil-fuelled pension fund booked a 3% return on its global real estate holdings during the second quarter, up from 1.99% in the first three months of 2014.

The Norwegian Government Pension Fund Global (known as Norges) had total assets of almost NOK 5,478 bn (€667 bn) at the end of the second quarter.

Norges Bank Investment Management - which manages the fund - reported that the investment portfolio - comprising equities, fixed income investments and real estate - returned 3.3%, or NOK 192 bn (€23.4 bn) in Q2 2014.

Equities, which account for 61% of the pension fund's portfolio, returned 4%. Real estate was the next best performer, returning 3.04%. Fixed-income investments (38% of investments) yielded 2%.

The value of the real estate portfolio rose to NOK 63 bn (€7.7 bn), or 1.2% of the overall investment portfolio at the end of the second quarter from NOK 59 bn, or €7.2 bn, in the first three months of 2014.

NBIM aims to boost the real estate weighting to 5% over time and unveiled a more aggressive real estate strategy in June to expand the fund's global real estate holdings to about €20 bn over the next two years.

Norges began direct real estate investment in 2010 and has since teamed up with top-class asset managers to build up its portfolio quickly. Its first targets were top-3 European markets in the UK, Germany, France, followed by European logistics and office and logistics joint ventures in the US.

Earlier this month Norges and The Crown Estate expanded their joint property holdings on Regent Street in London by acquiring a chunk of prime Mayfair real estate in a £381 mln (€478 mln) transaction.

Click here for an online PDF of Norges' Q2 2014 report