Norway Oil Fund to Change Property Strategy to Fix Poor Returns

(Bloomberg) -- Norway’s $2.1 trillion sovereign wealth fund is changing how it invests in real estate, citing disappointing results so far. 

Norges Bank Investment Management, as the investor is officially known, will expand its property investments to a broader geographical and sectoral approach starting in 2026, according to its letter to Norway’s Finance Ministry published Monday. 

The fund’s real estate strategy, focusing on direct investments in traditional sectors and a limited number of countries and cities, has been “vulnerable” to major market changes including the emergence of work from home and online shopping, it said. It pointed out that traditional sectors now require more operational management than previously, while more recent sectors have become investable for institutional investors. 

Both listed and unlisted real estate has disappointed, the letter said. “This has contributed to the real estate portfolio delivering weaker returns than the equities and fixed income we have sold to finance the investments.”

The fund had property holdings in 15 countries in Europe, the US and Japan, with a total value of 365 billion Norwegian kroner ($36 billion) by end of June 2025. About 1.9% of its total investments were in real estate, according to the NBIM website. The fund hired a new head of global real estate, Alexander Knapp, in May this year. 

NBIM also aims to establish “a more granular framework” for financing real estate transactions, it said. 

“Investments in well-established sectors with low vacancy rates will have a lower equity share, while projects with a need for operational involvement, in newer or emerging sectors or with elements of development risk will have a higher equity share,” it said. 

The fund also plans to increase its unlisted renewable energy projects and has expanded its US office to be able to do so. A strategic paper with more details is due to be published Dec. 10. 

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