Norway’s $2.1 trillion fund shuns data centres

Data centres are notably absent from the shopping list for the world’s largest sovereign wealth fund as it unveils a new strategy following a period of disappointing real estate results.

- HEIDI TAKSDAL SKJESETH NATASHA VOASE

Norges Bank Investment Management (NBIM), Norway's $2.1 trillion fund, is shaking up its property division as part of its next three-year strategy, published on Wednesday. However, data centres — one of the most hyped areas in real estate — won't form a major part of the new approach, Alexander Knapp, head of global real estate, said in an interview with Bloomberg.

Currently the fund has about 3.3% of its assets in real estate, with a roughly even split between public companies and unlisted exposure, Mr Knapp said. NBIM plans to increase this share to “somewhere between 3.5% and 7%” of the fund’s value by the end of 2028, he added. An increase of one percentage point would equate to roughly $20 billion.

NBIM is already exposed to data centres through its stake in Digital Realty Trust Inc, a US technology-focused real estate manager. The team is comfortable investing in a liquid public company while keeping clear of private holdings in this fast-evolving space, Mr Knapp said.

“] just think that when things are moving really quickly, you can either jump into the stream or you can just watch the fish go by,” he said. “And I think we're happy to watch the fish for a minute and see what happens.”

EYE ON ‘BIG PICTURE’