DänemarkFunds in the world’s top-ranked pension fund industry are responding to negative interest rates by buying up increasingly large stocks of real estate to safeguard returns.

Of the eight biggest Danish pension funds contacted by Bloomberg, six say they’re planning to expand their portfolios of real estate and other alternative assets. Several funds pointed to an expectation that yields on bonds will remain negative in coming years. Denmark has already had more than seven years of rates below zero, longer than any other country.

Jan Ostergaard, who oversees unlisted investments at Industriens Pension, a fund with about $26 billion in assets, says the appeal of real estate is that it’s “low risk” with “stable returns.”

The focus on property assets comes as institutional investors in Denmark await the publication of a government-commissioned report that will guide legislation in the rental market. According to a copy of the document seen by Bloomberg, models discussed include capping rents so that firms would potentially see the value of their investments cut in half.

IPE