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The two largest pension fund groups in the Netherlands are moving into new areas of social infrastructure, delegates heard heard at INREV鈥檚 annual conference in Vienna.

PGGM is 鈥減lanning to slowly but surely鈥� access housing for the elderly by 鈥渄eveloping own projects鈥�, said Eloy Lindeijer, chief of investment management at the 鈧�183bn institution.

APG, which manages 鈧�409bn in Dutch pension assets, also revealed it was also invested in social infrastructure, but at the other end of the demographic spectrum.

Patrick Kanters, managing director for global Real Estate and infrastructure, said APG was 鈥渋n talks with the government鈥� over investing in schools. Kanters said there were around 1000 schools in the Netherlands built between the 1960s and 1980s that are 鈥渋n need of refurbishment鈥�.

He said: 鈥淲e are interested in opportunities which could help strengthen the socio-economic structure of the Netherlands.鈥�

Naturally, PGGM and APG will also be looking for suitable returns on the investments, and the persistence of low interest rates will support their case.

Philip Coggan, columnist at The Economist magazine, noted in his opening remarks: 鈥淎s in the world of the blind the one-eyed is king, in an environment of negative bond yields the real estate rate will still be attractive.鈥�

Asked what happens when the 鈥渂lind start to see again鈥� and rates go back up, Kanters said: 鈥淲e do not need to be worried [that] real estate in portfolios will be hurt by rising rates, as it is easier to predict than other asset classes and all about cash-flow growth.鈥�

Lindeijer was similarly unconcerned. PGGM expects 鈥渋t will take another 15 years for interest rates to reach 3.5% again,鈥� he said.

鈥淥f course, we have a huge interest rate risk, but we will make money on the liabilities and, in the short term, we have a diversification benefit, cash and carry, etcetera 鈥� sole asset owners will suffer more from low yields on long-term investments.鈥�

Barry Petursson, head of real estate at the CAD12.1bn (鈧�8.41bn) Alberta Teachers鈥� Retirement Fund, said: 鈥淓ssentially, the asset classes are driven by relativity, but there is a minimum threshold that makes you absolute in a relative market.鈥�

The minimum threshold for Germany鈥檚 largest pension fund investor BVK is 3.5%, a return that the 鈧�70bn institution has to achieve annually.

BVK鈥檚 CEO Daniel Just said real estate can 鈥渃ontribute quite a lot for battling against low interest rates鈥�.

He added: 鈥淚f you do it right, and if you are not only concentrated on core and core-plus where everybody is, then you can do something on your returns.鈥�

However, Robin Goodchild, international director of global research and strategy at Investment Management, questioned whether taking more risk made sense in real estate. He presented figures based on US and European historic data showing that, 鈥渙n a net basis, value-add has delivered a lower return at much higher volatility and it does not look as attractive.鈥�

Goodchild said value-added investments in Europe had only started to 鈥渄eliver the higher return investors expected鈥� in 2014.

But Neil Harris, senior vice president at GIC and the , countered: 鈥淚f you take a time series that spans a downturn in the market, it is no surprise that value-add has underperformed as it is higher risk and more volatility.鈥�

Some of investors have been looking to emerging markets to generate higher returns. Kanters said APG had 鈥渂een very active in China with a joint venture to target logistics and in India with good partner with a good track record focusing on retail鈥�.

But he stressed it was not about getting a certain percentage of exposure to a certain market but rather about 鈥渇ollowing a good strategy鈥�.

He said: 鈥淚f you look over a long time it becomes clear it is very difficult to make money in emerging markets because timing is essential.鈥�

Nevertheless Amit Aggarwal, real estate investment officer at Los Angeles County Employees Retirement System (LACERA), is 鈥渓ooking at Latin America鈥� as part of the $48.4bn (鈧�42.5bn) pension fund鈥檚 efforts to grow its international real estate investments 鈥渇rom 3% to 15% over the next five years鈥� through commingled funds.