The man with $33bn to spend on property

 
Harriet Green
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Karsten Kallevig has been chief investment officer real estate since April 2011

Karsten Kallevig is the head of real estate at the world’s largest sovereign wealth fund, Norges Bank Investment Management. And that means he’s got at least $33bn (£19.6bn) to spend on expanding its real estate portfolio, Bloomberg reports.

The $860bn Norwegian fund, used to deposit the country’s petroleum revenue, got the go-ahead to move into the property market in 2010. Since then it’s bought up chunks of Times Square and the Champs Elysees. It even co-owns Regent Street with the Crown Estate.

Norges works predominantly in joint ventures, and its current strategy - to concentrate on 10 to 15 cities worldwide and broach Asia - is about to move up a gear.

Kallevig’s employing the same way of doing things there as he has been in the US and Europe: hit the cities with the best growth potential and where supply is constrained. The focus will be on offices and logistics property, steering clear of restaurants and hotels.

Something Kallevig, who joined the group in 2010, has had to contend with is actually keeping pace with the growth of the fund. It says it’s gradually increasing its property investments to as much as five per cent, so with the portfolio currently at $10bn, or 1.2 per cent, there’s some considerable growing left to be done.

He’s looking to minimise “really big mistakes”, as he put it to Bloomberg, by investing in staple US cities - Washington, New York, San Francisco and Boston - and the same in Europe: Paris, Munich, Berlin and London. Two years ago, Norges Bank took out a 50 per cent stake in the Meadowhall shopping centre in Sheffield, the rest of which is held by British Land.

Kallevig’s strategy to say no “left and right” has proved fruitful: the fund’s property investments returned 11.8 per cent in 2013.

While it doesn’t have a deadline, pace is increasing as more markets are moved into. Kallevig’s expressed his desire not to spread the fund’s resources too thinly, and over too many markets. His success so far has been through disciplined and fastidious business and, despite it being just the beginning of the journey, things are showing no sign of slowing down.

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