Norway's wealth fund, The Government Pension Global Fund, plans to buy Asian real estates, reports Bloomberg.
With its almost $870B worth of fund, The Government Pension Global Fund's recent decision in investing in real estate properties in Asia is an interesting move for all investors worldwide, Bloomberg notes. Karsten Kallevig, head of real estate investments at the Oslo-based fund, stated that the fund has picked two cities---Singapore and Tokyo.
"Tokyo is arguably the single biggest market in the world for real estate," Kallevig said in a March 20 interview with Bloomberg. Kallevig added, Although the fund doesn't have a specific spending target, "we can invest a lot in Asia," he said.
"My guess is office properties will be the main component, because that's what's for sale in those parts of town. There aren't many shopping malls in the center of Tokyo or the center of Singapore," he added.
The Norway fund has already invested in other parts of the world like New York, Berlin, London and Paris, notes Bloomberg.
Bloomberg reports that the recovery signs in Tokyo real estate industry could have piqued the interest of the Norway Fund. In 2012, Shinzo Abe, Japan's Prime minister, vowed to give a new life to Tokyo's real estate and true to his word, it has been on a better scale ---from 7 percent, the measure of unoccupied space fell to 5.3 percent, according to Miki Shoji Co., as reported on Bloomberg.
On the other hand, Singapore, with the influx of wealthy investors and foreigners, holds great promise for continuous boom in the property industry. According to Jones LaSalle Inc., in 2014, commercial office rents increased by as much as 14 percent, despite its size smaller than New York City's, Bloomberg reports.
Kallevig stated that they will also find local partners for their Asian investment and mentioned that they will visit these areas before the second quarter of 2015 ends. "If we're really successful there, then maybe we can add a third and a fourth and a fifth city at some point," Kallevig told Bloomberg.
This may be one of Norway's actions as a nation to lessen the impact it may have received from the decreasing oil prices recently, as reported on Customs Today.
According to the outlet, even Norway's State Educational Loan Fund Chief Executive Officer Marianne Andreassen prepares for this and said, "With a damping of the oil sector engine and the huge investments there, many who worked in those areas will need to work elsewhere."
Data on the size and rankings of the largest global funds which can be seen on swfinstitute.org, shows that The Government Pension Global Fund is not just Norway's biggest fund, it is the world's largest wealth fund ($863B), with UAE-Abu Dhabi's Abu Dhabi Investment Authority in second place ($773B) and Saudi Arabia's SAMA Foreign Holdings as the third wealthiest ($757.2B).
Norway's fund with its inception only in 1990, surpassed UAE-Abu Dhabi's fund which started in 1976. All of these funds were mostly focused on oil investments.
With Government Pension Global Fund's tactic to better allocate their funds, it would not be surprising if it continues to reign still, in the years to come, amidst several challenges.
