EUROPE - Denmark’s PKA says it expects to continue with “massive investments” in new property construction in 2012.
A fifth of the property investments currently held by the pensions administrator were made in last two years, and this investment pattern will continue in coming years, PKA predicts.
In 2011, PKA invested DKK1.1bn (€148m) in domestic and foreign real estate, after investing DKK1.4bn in the asset class in 2010.
Altogether, PKA’s property investments total around DKK12.9bn.
Nikolaj Stampe, head of property at the DKK150bn group, said: “The property market is in a situation where there are some attractive investment opportunities, which can benefit our members’ pensions.
“So in the last few years, we have been investing in this type of investment to an even greater extent than before.”
Stampe pointed out that almost 20% of PKA’s investments in real estate had been undertaken within the last two years.
“We expect this trend to continue in the next few years,” he said.
“Demand for residential property is expected to increase because of population growth in the big cities, and particularly in Copenhagen and Aarhus, so we expect investments in real estate to give a relatively high and stable return over time, which is not unimportant in a time of economic crisis.”
PKA cited the Danish Construction Association as saying institutional investors were important for the Danish residential property market.
Finn Frandsen, senior economist at the industry association, said: “Private housing construction is at a historic low at the moment because of the economic crisis, and the situation could become much worse if you didn’t have the massive capital and resources to invest that you do.”
If it were not for this source of investment, the market would be completely dead, he said.