Norway Allows Wealth Fund to Boost Real Estate
Norway real estate pushed a proposal allowing its sovereign wealth fund increase real estate holdings by over $17 billion, while refusing a call to venture into infrastructure projects.
The Norway real estate limit on transactions for the $850 billion fund, the country's biggest, was raised to 7 percent from 5 percent on Tuesday. The Finance Ministry stated that the real estate assets also needed to be separated from the general portfolio and be treated as an existing framework for deviations.
Norway real estate experts issued warnings to avoid getting near the ceiling. The ministry said that Norges Bank will aim for a lower share of unlisted real estate properties than 7 percent to avoid passing the limit and having to liquidate shares in the event of sudden value drops in the fund's listed investments, according to a feature from Yahoo.
The government implemented a process a year ago to expand the fund's mandate to look into infrastructure. The investor had been lobbying to alter its mandate aside from stocks and bonds. In 2010, it was allowed to invest 5 percent of its Stocks in real estate and it had generated a $28 billion portfolio of high-profile shares from Paris to New York.
The fund's heads proposed in December that it be given permission to invest as much as 5 percent in infrastructure as it sought to boost returns. It also wanted to increase its exposure to real estate to over 10 percent. It had suggested that alterations would come at the expense of its fund portfolio. It held about 3 percent in real estate properties at the end of 2015.
The government denied the plea to invest in infrastructure, claiming that such investments were exposed to major regulatory or political risk.
Norway real estate opposition party Labor announced its support of the proposal to boost the fund's transactions with real estate in hopes of expanding into infrastructure, according to a feature from Bloomberg.