After years as net buyers, Nordic institutional investors have reduced their exposure to real estate in the past two years, a new report from Pangea Property Partners shows. According to the report, Pangea Institutional Outlook, this is partly explained by increased appetite for investment in real estate outside the region, a growing focus on property development and the fact that many institutions’ exposure to real estate has become too big.
In total the Nordic institutions own real estate worth EUR 116 billion and the value has increased, despite institutions becoming net sellers. This is due to strong capital value growth in the Nordic market. The share of total AUM allocated to real estate is 9 per cent.
Pangea finds that while Nordic institutions still rank real estate among the most attractive asset classes, competition from other asset classes e.g. government bonds has increased. Other types of alternative investments, such as hedge funds and infrastructure also rank high.