Norway climbed sharply to second spot among international buyers of U.S. commercial real estate this year as its $870 billion sovereign wealth fund snapped up building portfolios across the nation, according to a report on Bloomberg.
The report, which cited data from New York-based research firm Real Capital Analytics Inc., stated that Norway’s sovereign wealth fund, which collects revenues from its oil and gas sector, spent over $3.2 billion in New York and San Francisco on commercial real estate assets. The sovereign fund also assumed debts, the report added.
Norway aims to invest five percent of its wealth fund in real estate markets worldwide, the report noted. Michael Knott, managing director of Green Street Advisors Inc., noted that the country is willing to invest in U.S. real estate even if it means lower yields for them.
“There’s an element of perceived safety in a hard asset in the United States, in New York City, that is harder to replicate in other alternatives,” Knott told Bloomberg. “Norway has the ability to hold indefinitely and would probably not be troubled at all by a low going-in yield.”
Norway has more than doubled its investments in the U.S. property market since last year. The country ranked sixth in terms of real estate transactions then, the report said.
It entered the U.S. property market after increasing its stakes in Europe’s real estate market for two years, a 2012 report on The Wall Street Journal said. It also noted that the country “arrived at a time” when valuations were towering in New York and other major cities, and myriads of foreign property investors were shopping around.
Canada remains the top foreign buyer of U.S. real estate, research from Real Capital said. According to the report, the country has bought assets worth $8.3 billion so far this year.
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