Azerbaijan’s State Oil Fund, also known as Sofaz, will start investing in real estate in three to four months as it seeks to increase returns and diversify its holdings, Dasinmaz Amlak magazine reported.

Sofaz will initially invest in commercial real estate in business centers of some European cities with transparent market environment and high liquidity, Israfil Mammadov, head of Sofaz’s fund management department, told the state-run magazine. It will later look into investment opportunities in other parts of the world, Mammadov was cited as saying.

The oil fund is working with foreign companies and organizations to establish a specialized structure that will handle investments in real estate, Mammadov said.

Sofaz, established in 1999 to manage state income from oil and gas sales, saw its assets grow 31 percent last year to $29.8 billion. Azerbaijan is the third largest oil producer in the former Soviet Union after Russia and Kazakhstan.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net