Real estate pessimism and credit enthusiasm

For more than a decade, one of the main trends among Nordic institutional investors has been an increase in real estate and alternatives allocations. While many types of alternative assets are still viewed favourably among Nordic investors, the sentiment around real estate investments appear to have turned more sour.

  In Nordic Fund Selection Journal’s latest survey of Nordic institutional investors, 40 per cent of respondents plan to decrease their allocation to domestic real estate and more than 30 per cent look to reduce their exposure to international real estate. Rising interest rates and inflation can be seen as some of the main drivers behind this trend, potentially combined with the post-pandemic impact on the real estate sector. When asked about the biggest investment concerns going forward, some respondents highlight real estate valuations and commercial real estate. The survey polled 20 Nordic institutional investors with combined assets of EUR 453 billion. Infrastructure tops the list of asset classes that