EUROPE - Vital Scandinavian Property Fund is targeting a second closing as a result of demand from smaller European pension funds for exposure to the opaque Norwegian market.

In addition to insurer Vital Forsikring, which holds a 51% stake, investors in the fund include unnamed pension schemes from Switzerland, Germany, Austria and Finland. It had its first, €42m closing in Q1 this year. The insurer has not set an eventual target size.

Spokesman Stein Berge Monsen attributed pension fund demand both to the markets targeted by the fund and to the fact that all the investors in the fund were pension funds or insurers. "It's important that we're in the same boat as other investors," he said.

The fund currently holds five assets worth €275m, all located in Sweden and Norway - a market in which, according to Simon Mallinson, European research director at Invesco Real Estate, "domestic investors can usually outbid everyone else".  

Monsen acknowledged that investing in Norway was "an issue" for a smaller pension schemes. "The Norwegian market looked upon as difficult to enter but we've got a good product with a solid owner," he said. "It's easy to go to the credit committee and say you're investing in a debt-free fund."

In addition, favourable macro factors had created "solid and stable" Scandinavian real estate markets. "With GDP growth that is significantly outpacing Europe, well-balanced public finances, and stable financial markets and political environment, [Scandinavian markets] are regarded as a safe haven," said Monsen.

Vital Forsikring has Scandinavian real estate assets under management worth €4.5bn.