When Norway’s giant sovereign wealth fund said in 2008 that it would put up to 5% of its assets into real estate for the first time, it was one of the biggest property stories of the year and a rare positive note for a sector in turmoil.

Where would the fund, called Norges Bank Investment Management, invest? What would its first deal be? How quickly would it put the billions it had allocated to the sector to work? This is what the real estate industry was asking itself.

The one question that didn’t really get asked, certainly outside of Norges Bank, was whether investing in real estate would bring any benefit for the fund? The answer: No, not really.

In June this year the Norwegian government asked Norges Bank, which has total assets under management of $1.2 trillion, to undertake a review of all the asset classes in which it invests, including historic performance.

Norges Bank made its first investment in real estate in 2011, buying a 25% stake in London’s Regent Street from the Crown Estate for about £450M. Since then, its portfolio has grown to about $53B, 4.45% of the overall portfolio, some of it in direct property, some of it in shares in listed property companies.

Its direct real estate investments are concentrated in New York, Boston, Washington, San Francisco, London, Paris, Berlin and Tokyo, mainly in the office, logistics, retail and apartment sectors. IPE Real Assets, which first reported the results of the review, said it is the 12th-largest real estate owner in the world.

In spite of the push, and the noise it created, Norges Bank told the government its returns are almost exactly the same as they would have been if it had not invested in real estate at all.

Since it first invested in the sector, Norges Bank’s annual return from its real estate investments has been 5.74%. In order to invest in real estate, the fund sold stocks and bonds. Those stocks and bonds would have returned 7.18% if the bank had kept them.

When looking at just its direct property purchases, and excluding shares in listed property companies, which were hit hard by the pandemic, its property investments returned 6.32%. The stocks and bonds it sold to fund these purchases returned 6.29%, so real estate outperformed just slightly, but with a trade-off in terms of liquidity.

Norges Bank added that investing in real estate had slightly lowered the volatility of its portfolio.

Norges Bank said in 2019 it would not be looking to push its real estate holdings to 7%, a target it had previously set. But it has not stopped investing in the sector altogether. Just this week it put $436M into a $1.23B recapitalisation of two life sciences buildings in Boston.