O Norwegian sovereign wealth fundvalued at US$2 trillion, has taken a cautious stance on investments in data centers due to the sector’s volatility, the agency’s new head of real estate investments told Reuters.
“We have no concrete plans to invest there,” said Alexander Knapp, the new head of real estate at Norges Bank Investment Management (NBIM), the fund’s manager.
The world’s largest sovereign wealth fund has stakes in companies that own data centers, but has no direct stake.
A NBIM launched this Wednesday (10) a new real estate strategy that foresees the expansion of its operations beyond the main cities in Western Europe, the United States and Canada, said Knapp.
This could mean investing directly in the hot rental property market, which has attracted several large competing investors.
“We’re trying to be cautious in our approach, so with volatile sectors, we’re very careful,” Knapp said when asked about data centers, adding, “We’re trying to make investments that increase the returns of the fund as a whole and not take undue risk.”
UBS predicts very robust demand driving the construction of data centers, particularly in the US, as large technology companies such as , aeo build infrastructure to support the development of AI.
At the same time, some investors fear that this growth could be too fast, unsustainable and end suddenly.
Real estate market
In a letter dated November 3 and addressed to the Norwegian Ministry of Finance, NBIM stated that its real estate investments have underperformed its holdings in stocks and bonds, adding: “Norges Bank is not satisfied with the results in real estate management and is implementing changes in strategy.”
The real estate sector recorded a return of 1.8% in the first half of 2025, according to data from the fund, compared to 6.7% for stocks and 3.3% for bonds.
NBIM has been investing directly in real estate since 2010, and those investments were worth $36.09 billion, or 1.86% of the fund’s total value, as of June 30, according to fund data.
In addition, the fund has investments in real estate companies listed on the stock exchange, which totaled US$32.80 billion on June 30, or 1.69% of the total value, according to the institution itself.
The unlisted part of the portfolio returned 4.0% in the first half of 2025, according to fund data, while investments in listed properties returned -0.5%.
Consolidation
NBIM’s goal is to develop a broader portfolio, with more opportunities and more possibilities for diversification.
The private part of its real estate portfolio is concentrated in 10 global cities: Tokyo, Singapore, New York, Boston, San Francisco, Washington, London, Paris, Berlin and Munich.
“Now it’s a strategy for Western Europe and a strategy for the U.S. and Canada,” Knapp said. “So geographically broader, without naming specific cities, we’re just looking for good locations.”
The fund aims to fully integrate public and private real estate investments, Knapp said, meaning it will evaluate whether to invest by acquiring a direct stake or investing in a publicly traded real estate company.
The private market real estate portfolio has tended to focus on offices, retail and logistics, while other sectors, including housing, have been held through investments in publicly traded companies.
In the future, the fund may also acquire residential properties, including student housing, Knapp said.
“It’s a consolidated segment of the real estate market and one we would be willing to invest in,” said Knapp.
