Azernews.Az

State oil fund Sofar, which holds Azerbaijan`s revenues from crude exports, plans to establish a specialized entity for investing in real estate, its official says.

``Now it is important to set up an efficient entity which will ensure interests of the State Oil Fund when investing…and carry out purchase and sale transactions,`` Israfil Mammadov, head of the department for managing Sofar funds, said in an interview with Dashinmaz Emlak (Real Estate) magazine, published by the State Committee on Property. ``The Fund is carrying out substantial work in this connection in conjunction with relevant foreign companies and institutions.``

Mammadov said that during the acquisition of real estate Sofar will avail of the services of brokers with extensive experience in this field, who will have to meet strict requirements during their selection.

``The State Oil Fund will begin investing in real estate within the next three to four months,`` Mammadov said.

He said investments in real estate will be made with extreme caution.

``At the first stage Sofar plans to invest in commercial real estate located in the central parts of major cities in countries with a transparent market environment and high liquidity. To this end, we have thoroughly studied a number of real estate markets of a number of cities in these countries,`` Mammadov said.

He said the liquidity of such assets should be high, and the price and yield - stable.

``When investing Sofar funds in real estate, presence of long-term lease agreements, location in the downtown area, excellent conditions and provision of modern technology will be taken as a basis,`` Mammadov said.

He said Sofar funds will primarily be invested in European real estate markets, then the markets of other countries will be considered.

``Sofar has already held meetings with influential brokers, major investment managers, large owners of real estate, law firms and other companies, and considered their proposals,`` Mammadov said.

85 percent of Sofar`s investment portfolio in 2012 will be formed at the expense of money market instruments and debt market, in line with the fund`s 2012 investment policy approved by the president of Azerbaijan.

Up to five percent of the investment portfolio may be invested in stock, another five percent - in real estate, and five percent - in gold. Gold and real estate are new areas for the fund`s investment.

Sofar`s total investment portfolio amounted to about $32.3 billion as of the first quarter of 2012, or 99.79 percent of total volume of assets.

As of April 1, Sofar`s assets increased by 8.6 percent to nearly $32.36 billion.