Real estate constitutes 10% of the total APG portfolio, representing €51bn in assets. This is invested globally and in a diversified manner across sectors and investment type. The key objectives of its real estate investments are obtaining exposure to diversified real estate equity, achieving solid overall risk-adjusted returns and annually outperforming benchmarks through active management.

It believes that private and listed real estate is the same asset class, despite differing volatility metrics, and therefore the firm employs managers who can manage both investment types. This results in a fully multidisciplinary and diverse team of portfolio managers.

APG uses a top-down process for portfolio construction, investing with a clear vision of the five megatrends – continued urbanisation, demographic and social changes, technological advancement, the experience and sharing economy and climate change and resource scarcity – and how they will shape communities, societal structures and lifestyles.

Its real estate portfolio showed resilient performance due to its diversification across regions, sectors and risk styles. In September 2023, APG transformed its APG Tactical Real Estate Pool into the APG Global Developed Real Estate Responsible Investments Index Pool. The strategy was designed in-house by APG and targets global listed real estate investments with an ESG-CRREM aligned index as its benchmark.

While most traditional real estate sectors are set for further value corrections in 2024, APG said it is only positioning in the most stable ones and likewise in alternative sectors with best-in-class operating partners.

APG also considers ESG standards when making investment decisions and recently began introducing impact investing into its portfolio, including a new €5bn mandate from ABP, focused on the Netherlands and seeking both financial and societal returns.