Norway’s sovereign wealth fund has faith in the US property market—$10 billion worth of it

November 30, 2012
November 30, 2012

Yngve Slyngstad, the CEO of Norges Bank Investment Management—which runs Norway’s $660 billion sovereign-wealth fund—told Bloomberg today, “The U.S. is the next real estate market to invest in.”

The fund invests as much as 5% of its assets in conservative property assets like commercial real estate, and already has money in London, Paris, Frankfurt, Berlin and Sheffield (UK), and Zurich. But Slyngstad said that he now wants to invest one third of that cash—or $10 billion—in the US.

The fund has been fed by Norway’s oil revenues, as more and more countries venture into the Norwegian Sea in search of black gold. It’s also benefited from the European crisis, as investor money has fled north away from the euro area and into non-euro countries in Scandinavia. Norway’s sovereign-wealth fund recently surpassed Abu Dhabi’s as the world’s largest, despite taking a $110 billion loss after the fall of Lehman Brothers.

It’s potentially a sizable injection into the US property markets, which have seen a rebound over the last few months. After years of housing and economic crisis, properties are cheap. Meanwhile, slow but steady growth in the US economy means more businesses are looking to rent commercial space. While commercial property prices rose 6.9% from a year ago, they remain 21.8% below prices in December 2007. However, the National Association of Realtors predicts that commercial retail vacancies will decline in 2013 and 2014, pushing rents higher. That would translate into higher property values—precisely what the Norwegians are hoping for.

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