Why Norway Mega Fund Has Gone On Billion Dollar London Shopping Spree

Forbes

24-03-2025

Norway's huge soveriegn wealth fund has acquired a 25% stake in London's Covent Garden.
Not since the Vikings has Norway embarked on quite the scale of U.K. invasion going on across London's West End right now.
Wielding the kind of thunderous financial power that would make even Thor feel inadequate rather than an axe this time round, the world's biggest sovereign wealth fund, fuelled by decades of huge oil and gas profits from Norway' North Sea fields, has made yet another foray into prime London retail real estate.
The country's investment vehicle last week agreed a circa $735 million deal to buy a quarter of the famous Covent Garden estate, a former fruit and vegetables market long since transformed into an attractive piazza of top retail, drinking, dining and entertainment that serves as of one London's most popular destinations.
The estate includes more than 220 stores set within the city's theatre heartland and famous destinations such as the Royal Opera House and London Transport Museum.
In the deal, Norges Bank Investment Management (NBIM), which manages $1.8 trillion globally on behalf of the Norwegian government, has bought the 25% stake in the $3.5 billion Covent Garden real estate portfolio of London-based landlord Shaftesbury Capital.
But this is not NBIM's first rodeo. The deal comes just two months after Norges snapped up a $395 million stake in London's Mayfair district from Grosvenor, the Duke of Westminster's real estate company, encompassing everything from retail and F&B to swish offices. In all, it brings the Norwegian fund's investment in the U.K. capital city to $1.13 billion when combined with its long-term stake in Regent Street, jointly owned with the property arm of the U.K. Royal Family, The Crown Estate.
The latter ownership has proven a huge success as the partners have used their near complete control of the retail zone to curate an offer of international names from athleisure to homewares, plus a smattering of luxury.
The fund is also a shareholder in Covent Garden owner Shaftesbury, holding a 25% in the company.
Similarly, Shaftesbury has control of how it manages Covent Garden while Grosvenor wields huge influence across its estate of upscale Mayfair addresses, meaning NBIM is buying into areas where it can manage future trends rather than simply react to them.
Oxford Circus will be home to a new IKEA from May on the former site of Topshop's former flagship.
Beyond London, Norges also became the sole owner of the enormous regional mall Meadowhall on the outskirts of northern city Sheffield last year, after striking a circa $465 million deal with co-owner British Land.
Combined, Norges now owns $1.6 billion of prime U.K. retail real estate, with most of that built in less than 12 months. Who said shopping centers were dead?
On the new Covent Garden stake, the head of NBIM's UK real estate arm, Jayesh Patel, said the investment 'underscores our belief in the strength of London with the portfolio complementing our other high quality West End investments', as he described Covent Garden as "one of the world's most recognized retail, leisure and cultural destinations'.
Covent Garden was among the prime central London areas that drew in big crowds during the Christmas holiday season – many of them U.S. travelers making the most of the strong dollar – helping Shaftesbury record its busiest ever holiday shopping period with more than 1 million visitors a day to its portfolio, which spreads from Covent Garden to the adjacent Chinatown and Soho districts.
It is also a far cry from the bleak days post-pandemic days when London's West End, most notably Oxford Street, faced a huge crisis as visitor numbers plummeted and Oxford Street became overrun with American Candy stores.
Local government and landlords have spent much of the past five years unwinding that toxic legacy, largely returning Oxford Street to a major destination for international flagships, the latest of which will be an IKEA store at the famous crossroads between Oxford Street and Regent Street, slated to open in May on the site of the former Topshop flagship.
In the meantime, Norway, which sends the traditional Christmas tree that illuminates Trafalgar Square annually, has never had such a strong hold on the future of the capital.