REAL ESTATE - The Scottish Shetland Islands local authority pension fund is to hire a real estate investment manager to invest £20m—40m (€29.7m—59.3m) in UK property.

Gavin Mackintosh of Hymans Robertson, which is advising on the appointment, said the fund would likely sell off its existing investment in London office property to pay for the move.

"The current investment isn't doing well," he said. "They want to spread the risk."

The pension fund will initially earmark £20m for "a wide range" of investments, including retail and commercial, by the end of March 2007. However, its real estate interest will remain in the UK.

A further £20m investment - either from the pension fund or charitable trusts it has an interest in - will follow at a later date. The same manager will handle both tranches.

In a separate development, the Rhondda Cynon Taf local authority pension scheme is scouting a multi-manager to invest 10% of its portfolio in primarily UK real estate.

Sion Cole of advisers Hewitt Beacon & Woodrow said the Welsh scheme was making the move for "investment strategy reasons" and would consider investing 25% of the £1m allocation in mainland European markets.

Both schemes are also inviting bids from currency investment managers. The Scottish scheme plans to invest £5m in an active currency pooled fund. The Rhondda fund will invest £50m.