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Norway’s USD 2 trillion sovereign wealth fund has signalled a cautious approach toward direct investment in data centres, calling the sector too volatile. Alexander Knapp, the new real-estate head at Norges Bank Investment Management, said the fund will avoid direct ownership even though it holds equity in data-centre operators. NBIM has instead updated its property strategy to widen investments across Western Europe, the US and Canada, with a growing focus on stable residential segments such as rental and student housing. The shift follows weaker real-estate returns—1.8% in the first half of 2025—compared with stronger equity and bond performance. The fund aims to prioritise steady, lower-risk income streams.
Norway’s USD 2 trillion sovereign wealth fund has adopted a conservative view on investing directly in data centres, citing concerns over the sector’s volatility. Alexander Knapp, the new head of real estate for Norges Bank Investment Management, said earlier this week that the fund has no active plans to pursue such investments. While NBIM holds equity in companies that operate data centres, it has avoided taking direct ownership positions. Advertisement
The comments were made as NBIM unveiled an updated property strategy, which will broaden its focus beyond specific metropolitan centres. The revised plan spans Western Europe, the United States and Canada, offering opportunities to take direct stakes in residential sectors, including the expanding rental housing market. Knapp noted that the fund aims to remain measured, prioritising stable returns and limiting exposure to sectors that show high levels of uncertainty.
This cautious stance comes even as global demand for data centres continues to accelerate, particularly in the United States, where major technology companies are building extensive infrastructure to support artificial intelligence development. However, NBIM is mindful of concerns that growth in this segment could be unsustainably rapid.
The strategic shift also follows subdued performance in NBIM’s real estate portfolio. In a letter submitted last month to Norway’s finance ministry, the fund acknowledged that property investments had not matched returns seen in its equity and bond holdings. Real estate delivered a 1.8% return in the first half of 2025, significantly below 6.7% for equities and 3.3% for bonds.
As of June, NBIM’s direct property portfolio was valued at USD 36.09 billion, with an additional USD 32.80 billion invested in listed real estate companies. The fund intends to further integrate these public and private holdings as part of its expanded geographical and sectoral framework, including potential acquisitions in residential categories such as student housing.
Source - Reuters
5th Jun, 2025
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