EUROPE - European institutions are showing an increased appetite for US real estate, says the new chief executive of US-based asset management firm Principal Global Investors' European operations.

Grant Forster said PGI is seeing "increasing appetite" for US real estate from European pension funds and institutional investors. He said the move was coming as European institutions seek to diversify.

Forster recently took over as CEO of PGI's London-based European arm from Kirk West who has moved back to Australia to serve as head of PGI's business there. Forster was previously director of institutional marketing at its head office in Des Moines, Iowa.

Forster says that Principal is now targeting Europe. "We've yet to break into this market," Forster said in an interview. The European operation has 20 staff, which Forster sees growing. "We're in a growth phase," he says.

He declined to say put on figure on its European assets under management, saying it was "small but not completely immodest".

PGI, part of the Principal Financial Group, has more than 100 billion dollars in assets under management. Sixty billion dollars of that is in fixed income, 25 billion dollars in real estate and 15 billion dollars in equities. Forster said there was no breakdown for Europe.

"The UK and Europe is a central pillar of our global expansion plan and the appointment of Grant as CEO in Europe, as well as the recent appointments of key London-based investment staff in both equities and fixed income, represents the completion of an important stage of our strategy in Europe," said PGI's chief executive Jim McCaughan.

In May PGI recruited Juliet Cohn from Allianz Dresdner Asset Management to be its head of European equities. And in June it named HCM Capital Management's Heiko Schuleit as head of business development for Germany, Austria and Switzerland.