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Norways Oil Fund Buys Londons Savile Row
By STANLEY REED AUGUST 11, 2014 2:49 PMAugust 12, 2014 7:47 am 2 Comments
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Photo
London's premier tailoring street, Savile Row, was turned into an urban farm for
a day in 2010.
London's premier tailoring street, Savile Row, was turned into an urban farm for
a day in 2010.Credit Facundo Arrizabalaga/European Pressphoto Agency
LONDON The famed custom tailors of Savile Row have a new landlord.
Norways oil fund, the worlds largest sovereign wealth fund, is adding to its colle
ction of high-end real estate by acquiring a 57.8 percent interest in the Pollen
Estate, a parcel of properties in Londons elegant Mayfair district that includes
Savile Row, the street renowned the world over for its bespoke suits.
The fund bought the stake for 343 million pounds, or about $575 million, from th
e Church Commissioners, which manages the Anglican Churchs holdings, according to
Norges Bank Investment Management, which runs the investment vehicle.
The Pollen Estate holds a collection of 43 properties in a fashionable area of l
ow-rise buildings whose value seems to be ever increasing.
While the four-acre stretch includes Savile Row, its bread-and-butter is increas
ingly offices for businesses like private equity and investment banking boutique
s whose bosses want to be near the shops and restaurants of the West End rather
than out in the windy canyons of the banking center at Canary Wharf. The Norway
funds own London offices are in the Pollen Estate, according to a map on the esta
tes website.
Pollen Estate dates from a 1622 purchase of 35 acres, which were developed in th
e 17th and 18th centuries and now form a substantial part of the exclusive Mayfa
ir area, according to the website. Members of the Pollen family retain a stake o
f almost 26 percent.
The purchase continues the strategy begun in 2010 by Yngve Slyngstad, the funds m
anager, of diversifying away from stocks and bonds by buying properties in leadi
ng cities including London, New York and Paris.
Mr. Slyngstads first foray into real estate was a 25 percent stake bought for abo
ut $770 million in Regent Street, which is lined with shops like Burberry and Ha
mleys, the toy emporium.
The funds 75 percent partner in Regent Street is the Crown Estate, which manages
about 10 billion in property for the British Treasury. The Crown Estate joined th
e fund in the Pollen Estate purchase, buying 6.4 percent for 38 million.
British property prices are soaring, especially in London. The Crown Estate said
the value of its holdings rose almost 15 percent last year.
David Guttentag, a broker at Pearl & Coutts, a commercial real estate firm based
in London, estimated that selling prices in central London had risen 30 to 35 p
ercent over the last two years. We are selling buildings because prices are absolu
tely crazy, he said. It would be silly not to sell.
Recently, the Norway fund, which has investments of about $860 billion, said it
would be setting up a special real estate group within the fund and that it hope
d to invest roughly $10 billion a year over the next three years.
The fund reported that real estate represented 1.2 percent of its holdings at th
e end of the first quarter of this year but that it wanted to increase that prop
ortion to 5 percent. Real estate returned 2 percent in the first quarter, the fu
nd said, compared with 2 percent for bonds and 1.5 percent for stocks.
The fund already owns property along the Champs lyses in Paris and in Times Square
in New York. The latest purchase is according to our strategy to build a concent
rated global portfolio, Thomas Sevang, a spokesman for Norges Bank Investment Man
agement, said by telephone.
Some observers think the big expansion into real estate could be a mistake becau
se it requires hiring new personnel and a very different approach to investing t
han securities investing.
Real estate investing is extremely demanding; it is different from buying and sel
ling listed equities, said Knut Anton Mork, chief economist for Norway at Handels
banken Capital Markets, an investment bank in Oslo. You need to manage properties
. You have tax liabilities on a different scale.
A version of this article appears in print on 08/12/2014, on page B5 of the NewY
ork edition with the headline: Land Buy.
2
COMMENTS
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ASSET MANAGEMENT, FINANCIAL SERVICES, REAL ESTATE, BURBERRY, CROWN ESTATE, HANDE
LSBANKEN, LONDON (ENGLAND), MAYFAIR (LONDON, ENGLAND), NORGES BANK, NORWAY, REAL
ESTATE (COMMERCIAL), SOVEREIGN WEALTH FUNDS
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