The oil fund, officially referred to as an international state fund for pensions (Statens pensjonsfond - Utland), is responsible for securing Norwegian pension obligations. It was approved by parliament in 1990 as a means of setting aside Norwegian oil revenues for future generations.
The fund received its first deposits in 1996 and had grown to NOK 1,619 billion by the end of August. It already holds enough reserves to buy up the entire island of Manhattan, based on a recent valuation of Manhattan real estate by the New York City Finance Department set at USD 200 billion.
There's no question that it's become a major player in the international investment market. Its managers now aim to earmark NOK 300 billion (about USD 50 billion) to more than dabble in the real estate market.
Approval for real estate investment must first come from Norway's central bank (Norges Bank), which acts as the formal owner of the fund. If the bank gives the green light, it's expected that around 8-10 percent of its total assets will be put into real estate.
Prospective real estate investment targets will mostly be in Europe and the US.
"I can confirm that work (on the prospect of real estate investments) is going on in the bank, but what we'll advise, and when we'll take any proposal to the finance ministry, I can't say," Knut N Kjær, head of Norges Bank Investment Management, told newspaper Aftenposten.
Some think a proposal can come this autumn. If parliament approves a change in the fund's so-called "investment universe," which now consists of stocks and bonds, the first real estate investments could be made in 2008.
