Norway’s oil fund strikes £570mn deal to buy quarter of Covent Garden

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Norway’s oil fund has struck a £570mn deal to buy a quarter of Covent Garden from UK-listed landlord Shaftesbury Capital, in the sovereign wealth fund’s latest major bet on the fortunes of central London.

Norges Bank Investment Management has exchanged contracts to acquire a 25 per cent non-controlling stake in the £2.7bn Covent Garden estate, which Shaftesbury will continue to manage. It follows a deal for a £306mn stake in part of the Duke of Westminster’s Grosvenor estate this year.

“This investment underscores our belief in the strength of London with the portfolio complementing our other high-quality West End investments. Covent Garden is one of the world’s most recognised retail, leisure and cultural destinations,” said Jayesh Patel, head of UK real estate at Norges.

The deal, first reported by CoStar News, brings Norges’ investment in London this year to more than £875mn — its first major acquisitions in the city since 2018.

The fund is also a major shareholder in listed London landlords, including holding a 25 per cent stake in Shaftesbury.

It has agreed private minority deals in the past. It already owns a stake in Regent Street with the Crown Estate, and has invested in the Pollen Estate near Savile Row, where it boosted its ownership share last year.

It also invested outside London last year, taking full ownership of the Meadowhall shopping centre in Sheffield in a £360mn deal with British Land.

“The bigger picture is [Norges] rolling up west-end estates as a vote of confidence,” said Jefferies analyst Mike Prew in a note.

Norges will pay £570mn in cash for a one-quarter share of Covent Garden, which will continue to hold £380mn of debt against its £2.7bn property value.

The deal price confirms Shaftesbury’s independent valuations for the portfolio of 220 buildings around the historic vegetable market and Royal Opera House in central London.

Shares in listed landlords have traded at a discount to the value of their assets in recent years as high interest rates made investors wary of commercial property. Shaftesbury CEO Ian Hawksworth said the deal showed private investors were taking a more positive and selective view of the sector. “There is plenty of evidence in the market that private capital is placing a premium on high quality real estate above the stock market.”

The West End has prospered from a rebound in tourism since the pandemic. Shaftesbury reported its busiest Christmas ever in 2024 with more than 1mn visitors a day at peak times to its portfolio of properties spanning Soho, China Town and Covent Garden.

Rising rents for its shops, restaurants and office space boosted the value of its £5bn of property holdings by 4.5 per cent in 2024. Shaftesbury said the proceeds of the deal gave it flexibility to reduce debt, invest in existing properties and acquire more buildings within its West End domain.