Brexit takes toll on Norwegian sovereign wealth fund

(Last Updated On: August 17, 2016)

The world’s largest wealth fund has downgraded the value of its property portfolio in the UK by five per cent, following the United Kingdom’s vote to leave the European.

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The Norwegian sovereign wealth fund said the change comes due to the uncertainty following the UK referendum to quit the EU.

Some 23 per cent its property portfolio is invested in the UK with 16 per cent of the total located in London alone. “It was pointed out to us that the uncertainty of the assessment of the value (of our British property portfolio) by external assessors has increased,” deputy CEO Trond Grande said at a press conference in Oslo.

“Due to the increased uncertainty, it was decided to decrease the value of the property portfolio by five percent in relation to the value our external assessors gave us,” he said.

“It’s an extraordinary measure,” Trond Grande as he presented second-quarter results. Given a pick up in the listed real-estate market in the third quarter “we at least have no indication that it should be adjusted further down,” he said, adding “Brexit probably will mean something for UK market and UK and London property markets. We did the devaluation according to that. However, we think it’s really early days to speculate on what. Be the ultimate impact,” he concluded.

The fund has bought London property following the Brexit vote, paying £124m for the leasehold of 355-361 Oxford Street, a retail and office property.

Mr Grande, deputy chief executive of the fund’s manager, said that it saw few bargains, however. “I wouldn’t say that we particularly view the outcome of Brexit as an opportunity for us.”

People are now hoping that this new change won’t affect the UK property market too much. Now we have to sit back and wait to see.

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Written by: The Team | On: August 17, 2016

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