(Mar 23): Norway\u2019s wealth fund is making final preparations for its first Asian real estate investment as it builds a portfolio of properties in the world\u2019s biggest cities.<\/p>\n
After scouring Asia for investment opportunities, the $870 billion fund, built from Norway\u2019s oil revenue, has narrowed its search to Singapore and Tokyo, said Karsten Kallevig, head of real estate investments at the Oslo-based fund.<\/p>\n
\u201cTokyo is arguably the single biggest market in the world for real estate,\u201d he said in a March 20 interview. While the fund doesn\u2019t have an ultimate spending target, \u201cwe can invest a lot in Asia,\u201d he said.<\/p>\n
The Government Pension Fund Global, its official name, targets markets based on growth potential and supply constraints as it seeks to invest in 10 to 15 cities globally. It has already snapped up properties in New York, Paris, London and Berlin among other cities. The fund held about $18 billion, or 2.2 percent of its assets, in real estate last year, and is seeking to build that share to 5 percent.<\/p>\n
The focus is on specific markets rather than sectors, Kallevig said.<\/p>\n
\u201cWhen we say Singapore and Tokyo, we mean the better parts\u201d of those cities, he said. \u201cMy guess is office properties will be the main component, because that\u2019s what\u2019s for sale in those parts of town. There aren\u2019t many shopping malls in the center of Tokyo or the center of Singapore.\u201d<\/p>\n
Recovery Signs<\/strong><\/p>\n Since Japanese Prime Minister Shinzo Abe took power in 2012, he has pledged to revive the world\u2019s third-largest economy. The nation\u2019s commercial real estate market is showing signs of a recovery and office vacancies, a measure of unoccupied space, in Tokyo fell to 5.3 percent in February from 7 percent a year earlier, according to brokerage Miki Shoji Co<\/a><\/span>.<\/p>\n Singapore, smaller in size than New York, has seen a booming property market in recent years amid rising wealth and an influx of foreigners. Office rents in the central business district jumped 14 percent last year, the biggest increase in the region, amid a limited supply, according to broker Jones Lang LaSalle Inc<\/a><\/span>.<\/p>\n The fund got permission to expand into real estate in 2010 after previously being limited to investing in stocks and bonds. The real estate portfolio returned 10.4 percent last year, as the total fund gained 7.6 percent, its smallest rise since 2011. It has warned it expects diminished returns amid record low, and even negative, yields in key government bond markets combined with slow growth in developed markets.<\/p>\n Just as in earlier purchases in Europe and the U.S, the fund will find partners for the Asian expansion, Kallevig said. The next trip to the area will probably be in the second quarter of this year, he said.<\/p>\n \u201cIf we\u2019re really successful there, then maybe we can add a third and a fourth and a fifth city at some point,\u201d he said.<\/p>\n <\/p>\n Source ; Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":" (Mar 23): Norway\u2019s wealth fund is making final preparations for its first Asian real estate investment as it builds a portfolio of properties in the world\u2019s biggest cities. After scouring Asia for investment opportunities, the $870 billion fund, built from Norway\u2019s oil revenue, has narrowed its search to Singapore and Tokyo, said Karsten Kallevig, head …<\/p>\n