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IPE special report May 2018

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Denmark's PFA to ramp up real estate investment by up to 40%

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Denmark’s largest commercial pension fund PFA is planning to step up its real estate investment this year, putting up to DKK7.5bn (€1bn) into the asset class in 2015 and looking increasingly at foreign investments.

The DKK400bn pension fund said new investment abroad would focus on the UK and Germany, as well as Asia.

The planned level investment of this year is significantly higher than the DKK5.3bn the fund invested in property in 2014.

Michael Bruhn, director at PFA Ejendomme (PFA Real Estate), said: “With interest rates right at the bottom and not appearing likely to rise immediately, property investments are particularly interesting for us.

“So we expect to increase our investment level significantly in comparison to last year and reckon on investments of up to DKK7.5bn in 2015.”

The pension fund said it made an 8.7% or DKK1.7bn return on property in 2014.

Gains have been made on both domestic investments as well as foreign, with dollar and sterling currency market movements having further boosted profits, PFA said.

While a significant part of PFA’s investments would continue to be within Denmark, the pension fund said it was increasingly looking at foreign markets for investment opportunities.

It said it was focusing on Germany, the UK and, to an increasing extent, Asia, having been cautious about investing in the latter region up to now.

“The Danish property market has a limited size, and it can only support a certain volume of investors,” said Bruhn.

Because of this, PFA is looking more at other countries, and the main markets that are interesting are those where there is growth in the general economy, he said.

“This is the case in Germany and other countries, but we are also looking at – among other regions – Southeast Asia, with an ever-increasing level of interest, where we believe the market is now about to become interesting for us,” Bruhn said.

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