LONDON — Norway’s Global Government Pension Fund, the biggest sovereign wealth fund in the world by assets under management, spend £400 million buying two major retail spaces on London’s Oxford Street in 2016.
The fund released its annual report for last year on Tuesday, and within it, revealed its newest investments in real estate, which included the two prime sites in central London.
It bought 73-89 Oxford Street — a development currently under construction — for £276.5 million, and spent a further £124 million buying 355-361 Oxford Street.
The Norwegian fund — which is worth roughly £720 billion — already had a significant footprint in the capital, and owns a 150-year lease on roughly 25% of Regent Street, another of London’s most recognisable shopping streets. The fund also owns parts of New Bond Street, properties on Savile Row, the street famous across the world for its tailors. Outside London, it owns half of Sheffield’s Meadowhall shopping centre.
However, its relationship with UK property is a complicated one. In the immediate aftermath of the Brexit vote, it cut valuations on its UK property assets by 5%. It argued at the time, that soon after the vote, when assets were crashing and a mild panic gripped the markets, valuing properties in the UK became substantially more difficult.
Just a couple of months later, once the dust had settled a little after the vote, the fund reversed course and
revised up the value of its UK property portfolio. “We feel more secure with the valuation than we did at the end of the second quarter,” deputy chief executive Trond Grande said in October.
As well as spending £400 million in London, the Norwegian fund bought a €1 billion (£850 million) office development in Paris, and spent around $US665 million (£534 million) on office spaces across New York, Washington DC, and San Francisco. It also purchased two further UK properties for a combined £5.7 million, with one retail unit, and one described as being used for “logistics.”
Overall, however, the fund invested less in property in 2016 than in previous year, citing “increased uncertainty in the markets.”
“We made fewer investments in real estate than in 2015, due mainly to increased uncertainty in the markets in the first half of the year. Key factors behind this uncertainty included the decline in global interest rates and volatility in the listed real estate market,” the annual report says.
“Our strategy is to build a global, but concentrated, portfolio of unlisted real estate, investing in a limited number of major cities in key markets and in the global logistics market.”