Velliv considers real estate as an important asset class due to several valuable features it offers that reduce and diversify the risk for the overall portfolio, but at the same time offer an attractive risk-adjusted return. Its strong partnerships with other Danish pension funds via co-investments help contribute to the diversification of risk and reduction of concentration risk.

Allocation between commercial and residential properties is based on balancing risk/return, especially rental risk, and projected rental growth based and the properties’ ability to stabilize within the foreseeable future. The overall strategic objective remains to create a robust and defensive real estate portfolio which creates the highest possible risk-adjusted return.

Velliv focuses on creating an efficient portfolio composition through adjustments by divesting smaller and management-heavy properties while adding or developing modern office, logistics and residential properties and continuously reducing the exposure to retail and/or properties that are outdated, peripherally located or have limited sustainability/ESG potential.

Based on analysis of macro and microenvironments, Velliv’s most attractive risk-adjusted returns remain in the core/core+ segments. Meanwhile, the fund increased its allocation to value-add and opportunistic investment in 2022 and 2023.

To factor in ESG considerations and secure long-term value, Velliv invests primarily in new and modern energy and cost-efficient properties that either have an ESG-certification or are EU taxonomy-aligned. Velliv’s commitment to achieve a CO2-neutral investment portfolio across all assets by 2040 looks positive as the fund has also achieved a 39% reduction in scope 1 and 2 CO2 emissions across its real estate portfolio since 2019.

Velliv’s newest strategic initiative to invest and develop intergenerational residential communities that house mixed generations in a co-living scheme effectively takes advantage of tenant demand and trends.