In just 2014 alone, Norway has purchased over $3.2 billion in commercial real estate in the United States. The increased acquisition of foreign real estate correlates with their sovereign wealth fund goal of 5 percent of their assets in real estate.
There is a perceived tangibility of placing funds in hard assets like real estate, especially in high valued areas that seem stable even when the yield is low going in to the purchase. As of June 30 this year, Norway’s wealth fund held $10.3 billion of property worldwide, and yet that was only 1.2 percent of their total assets, which puts them 3.8 percent away from their target.
“If the relative value of real estate -- notwithstanding the fact that the absolute price appears high -- is better than other alternatives, you’re still going to maintain strong price stability," said Spencer Levy, head of Americas Research at the Los Angeles-based CBRE Group Inc.
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