Norway’s $870 billion sovereign-wealth fund secures buildings from New York to San Francisco making Norway the No. 2 foreign buyer of U.S. real estate. This year, the country has spent more than $3.2 billion on real estate in the United States.
Norway’s heavy presence in U.S. real estate makes the country the biggest international buyer after Canada. These foreign investors have driven building prices up because they are willing to accept a lower yield in place for a safe place to put their money. Norway is not only spending money in the U.S. but globally. The country is spending billions of dollars on global properties to reach the wealth fund’s target to invest five percent in real estate.
Last year, Norway began investing outside of Europe. The wealth fund held $1.3 billion of property across the world, totaling 1.2 percent of their total assets at the time. Norway recently acquired Boston Properties Inc. (BXP), the largest U.S. office real estate investment trust. The country arranged to buy 45 percent stake in 601 Lexington Avenue in Manhattan. The building was once known as Citigroup Center and is in Boston’s Atlantic Wharf Office Building. This deal’s cap rate is 3.8 percent, nearing the record-low investment yields from the 2007 property boom.