Published by Global Banking and Finance Review
Posted on December 10, 2025
OSLO, Dec 10 (Reuters) - Norway's $2 trillion wealth fund is being cautious about investing in data centres given sector volatility, its new head of real estate investments told Reuters.
"We don't have any active plans to make investments there," said Alexander Knapp, the new head of real estate for Norges Bank Investment Management (NBIM), the fund's operator.
The world's largest sovereign wealth fund has holdings in companies that own data centres, but no direct stakes.
NBIM launched a new property strategy on Wednesday which will see it extend its footprint outside major cities within Western Europe, the United States and Canada, Knapp said.
That could mean taking direct stakes in the hot rental housing market that has attracted several rival major investors.
"We're trying to be measured in our approach, so therefore, sectors that are volatile, we're very careful with," Knapp said when asked about data centres, adding: "We're trying to make investments that are going to enhance the returns of the fund overall and not take undue risk".
UBS expects very robust demand to fuel the construction of data centres, particularly in the U.S., as Big Tech companies such as Microsoft, Amazon and Google build infrastructure to support the development of AI.
At the same time, some investors are concerned this growth could be too fast, unsustainable and end suddenly.
NOT SATISFIED WITH RESULTS IN REAL ESTATE
NBIM said in a November 3 letter to Norway's finance ministry that the fund's property investments have underperformed its equity and bond holdings, adding: "Norges Bank is not satisfied with the results in real estate management, and is now making changes to the strategy".
Real estate posted a 1.8% return in the first half of 2025, fund data showed, against 6.7% for equities and 3.3% for bonds.
NBIM has been taking direct stakes in property since 2010 and those investments were worth $36.09 billion, or 1.86% of the fund's total value, as of June 30, fund data showed.
On top of that are investments in listed real estate companies, amounting to $32.80 billion as of June 30, or 1.69% of the fund's total value, the fund said.
The unlisted part of the portfolio posted a return of 4.0% in the first half of 2025, fund data showed, while investments in listed real estate returned -0.5%.
WELL ESTABLISHED PART OF REAL ESTATE UNIVERSE
NBIM's goal is to develop a broader portfolio, with more opportunities and more possibilities to diversify.
The private part of its property portfolio has been focused on 10 global cities - Tokyo, Singapore, New York, Boston, San Francisco, Washington, London, Paris, Berlin and Munich.
"Now it's a Western Europe strategy and a U.S. and Canada strategy," said Knapp. "So broader geographically, no cities named, we are just looking for good locations."
The fund wants to fully integrate the public and private real estate investments, Knapp said, meaning it will evaluate whether to invest by taking a direct stake or by investing in a listed real estate company.
The private market real estate portfolio has tended to focus on office, retail and logistics, while other sectors, including housing, were held through public company investments.
In future, the fund could also acquire residential properties, including student housing, Knapp said.
"It's a well-established part of the real estate universe and one that we would be willing to invest in," said Knapp.
(Reporting by Gwladys Fouche in Oslo, additional reporting by Iain Withers in London, editing by Alexander Smith)
