Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, has drawn a clear line around one of the fastest-growing real-asset sectors: data centres. Managed by Norges Bank Investment Management (NBIM), the fund has said it has no active plans to make direct investments in data-centre assets, pointing to sector volatility and risk factors that also include sustainability considerations.
The decision comes at a moment when data centres sit at the intersection of artificial intelligence expansion, energy constraints, and rising capital costs. While demand for computing capacity continues to accelerate across Europe and North America, the sector’s risk profile has become more complex.
A €1.7 trillion fund with a conservative mandate
Officially, the fund reports its figures in Norwegian kroner, reflecting its domestic accounting base. In late 2024 and into 2025, the Government Pension Fund Global’s assets surpassed NOK 20 trillion (≈€1.7 trillion), underlining its position as a dominant global investor across equities, bonds, and real assets.
Within that universe, real estate remains a relatively small but strategically important allocation. NBIM’s exposure is split between listed and unlisted property, with a long-term focus on income-generating assets rather than opportunistic development risk.
As of 30 June 2025, the fund’s unlisted real-estate portfolio was valued at approximately NOK 365.2 billion (≈€31 billion), while listed real-estate holdings stood at about NOK 332 billion (≈€28 billion). These figures illustrate how selective NBIM already is when it comes to direct exposure to physical assets.
What NBIM actually said about data centres
NBIM has been careful with its wording. The fund is not exiting the data-centre theme entirely, nor is it reducing indirect exposure held through listed equities. Instead, it has made clear that direct ownership of data-centre assets does not currently fit its risk framework.
Alexander Knapp, NBIM’s head of real estate, has said the fund is very cautious with volatile sectors and currently has no concrete plans for direct data-centre investments under its existing strategy. The concern is not demand for computing capacity, but predictability.
For a fund designed to preserve national wealth across generations, volatility goes beyond short-term price movements. It includes uncertainty around operating costs, regulatory exposure, technological change, and financing structures.
Why volatility matters in the data-centre boom
At first glance, data centres appear to fit the institutional playbook: long leases, blue-chip tenants, and mission-critical infrastructure. But the current expansion cycle differs from earlier waves.
Modern facilities require exceptionally high upfront capital expenditure, driven by power infrastructure, cooling systems, and grid connectivity. Many developments rely heavily on debt financing, which can amplify downside risk if assumptions around utilisation, energy pricing, or refinancing conditions prove too optimistic.
From NBIM’s perspective, this kind of asymmetric risk sits uneasily alongside a mandate built around transparency, liquidity, and long-term stability.
Energy and sustainability as financial risks
Sustainability is not treated as a peripheral issue within NBIM’s investment process. In the case of data centres, it has become a core financial variable.
Energy availability and pricing differ sharply by region, while long-term power contracts are increasingly difficult to secure on predictable terms. At the same time, data centres face growing scrutiny from regulators and local communities over electricity consumption, water usage, and carbon intensity.
For a fund that integrates climate risk into portfolio construction, assets dependent on uncertain future energy solutions add an additional layer of complexity. Even modest regulatory or grid-policy changes can materially alter long-term cash flows.
Real estate performance adds another layer of caution
NBIM’s restraint also reflects recent performance. In the first half of 2025, the fund’s overall real-estate portfolio delivered a return of around 1.8 percent. Unlisted real estate performed more strongly, while listed real-estate investments posted negative returns over the same period.
That divergence has reinforced internal scrutiny over where real estate fits within the fund’s broader allocation. Rather than expanding exposure to specialised and capital-intensive niches, NBIM has signalled a preference for assets with clearer income visibility and lower operational risk.
A tilt toward residential and lower-volatility property
Instead of pursuing the most high-profile asset classes, NBIM is widening its geographic scope and reassessing sector priorities. The fund has indicated openness to residential rental housing and student accommodation across Western Europe, the United States, and Canada, where cash flows tend to be more predictable and tenant demand more diversified.
These segments may lack the narrative appeal of AI-driven infrastructure, but they align more closely with NBIM’s emphasis on durability, scale, and long-term income stability.
What this means for the wider market
NBIM’s stance does not undermine the broader data-centre investment case. Infrastructure specialists, private equity groups, and investors with higher risk tolerance are likely to continue deploying capital aggressively.
However, when a €1.7 trillion sovereign investor publicly flags volatility as a reason to stay on the sidelines, it sends a signal. Conservative institutional capital may become more selective, favouring only assets with secured power, conservative leverage, and long-term tenant visibility.
That selectivity could widen the gap between prime, well-located facilities and more speculative developments.
Final perspective
Norway’s sovereign wealth fund is not betting against data centres. It is choosing not to own them directly at a time when growth in the sector is being shaped by leverage, energy uncertainty, and rapid technological change.
For NBIM, that caution reflects its core mission: protecting national wealth across generations rather than chasing the most fashionable trade. In today’s data-centre boom, stability, not speed, remains the decisive metric.
