Norway's Government Pension Fund-Global, Oslo, may soon begin investing up to 130 billion Norwegian kroner ($22 billion) in global real estate, Norway's Ministry of Finance said today.
The ministry laid out investment restrictions on how the 2.59 trillion Norwegian kroner ($424 billion) fund's previously announced 5% allocation to real estate might be implemented, including that investments be diversified geographically, by sector and over different types of instruments, and that they be phased in over “several years,” according to regulations posted on the ministry's website. The fund could use external investment managers and instruments such as direct real estate funds or real estate-based derivatives.
“Investments will principally be made in well-developed markets and within traditional types of real estate. Even so, we must be prepared for real estate prices to fluctuate a good deal,” Minister of Finance Sigbjorn Johnsen said in a related news release.
The ministry will require Norges Bank, which manages the fund's assets through subsidiary NBIM, to create quarterly and annual reports, and to set ceilings in areas such as how much in assets a single external manager may run or the real estate portfolio's total debt ratio.