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November 22, 2010
Norwegian Sovereign Wealth Fund Invest in Regent Street
According to the SWF Institute, the Norwegian Government Pension Fund – Global is the second largest sovereign wealth fund in the world. Established 20 years ago, the fund is currently holds assets worth approximately $510 billion.
Sovereign wealth funds are controlled by the government and are common in nations which rely on a large percentage of their income from national resources, particularly oil and gas. They invest overseas and have many benefits, including diversifying income and lowering the risk that arise form oil price fluctuations. They establish a base for long-term wealth for future generations and maintain macroeconomic stability.
Sovereign wealth funds have been particularly interested in the real estate sector and have invested significantly in London. Many SWFs now invest around 10% of their funds in foreign property. Qatar is one of the leading SWFs with many prestigious properties throughout London, including Chelsea Barracks, Harrods, and the former U.S. Embassy, just to name a few.
Norway gained government approval earlier this year to invest up to 5% of their fund in real estate. This will take a few years to accomplish, however they have already picked out a suberbly masstige prime investment; 25% of Regent Street. Although the deal is yet to be conclude, it is planned that they will purchase a 150-yearlong lease from the Crown Estate for £448 million, entitling them to 25% of the income generated by the street. This consists of a portfolio of some of the most prestigious properties on one of the most well known luxury retail streets in the world. This summer, the Regent Street Festival along with store promotions attracted over 600,000 visitors in one day.
The display of Christmas lights on Regent Street is world-renowned and also attracts a significant amount of tourists as well as London residents. International brands such as Apple, National Geographic, Hamley’s and Anthropologie have set up flagship stores here and other premium retailers such Paul Smith line the street.
JP Morgan predicts the West End to be the best choice with the greatest potential among all British commercial real estate. Regent Street especially is renowned for its great shopping and it is a major tourist attraction, reeling in lots of foreign money. The deal is expected to reach completion in March of next year.