Norway’s wealth fund notes property’s red flags — but doesn’t pull back
Oslo — The world’s biggest wealth fund has taken note of some worrying signs in global real estate markets, and decided not to pull back. A gap is opening between what stock-pickers think real estate is worth and what assets could be worth in the physical market, a potential sign that a correction could be looming. For example, the largest real estate investment trust (reit) in the UK, Land Securities, now trades at a 37% discount to net asset value. "It’s clearly a red flag in pricing if anything is too far off in any direction," Karsten Kallevig CEO of Norges Bank Real Estate Management, said in an interview at his Oslo office on Wednesday. Kallevig now oversees $24bn in key real estate, including much of London’s Regent Street, as well as properties on Times Square and the Champs-Élysées, among other prime spots. Overall, the fund holds about $1-trillion in stocks, bonds and real estate, and is in the process of building its property holdings to about 7% of its total portfolio. W...
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