What do investors want right now? Which are their preferred opportunities, and what do you need to know about them? This new series sums up what one investment adviser has gathered from roadshows, conferences and meetings across Europe
Heard in Paris during investor meetings: “I like London and want to be active there in the next few months.”
In the last couple of months, and despite the Brexit turmoil, both a real estate group with an entrepreneurial background and the real estate arm of a French private equity firm, in two separate meetings, shared with me some positive views on London. Brexit means short-term uncertainties. Nevertheless, London’s size, attractiveness and capacity for properties to reprice rapidly mean London is their priority for these investors. One of them has already made its first investment, a few weeks ago.
Heard in Milan at the seventh COIMA real estate forum: “Residential is the preferred asset class.” COIMA chief executive Manfredi Catella featured once again at its forum in Milan, which brought together some of the biggest global property investors and the best of the Italian real estate industry. This year the event took place on 24 October, and the investor panel included representatives from AMP, Ivanhoé Cambridge and Oxford Properties. Ahead of the panel discussion, the 200-plus participants in the forum were asked what was currently their preferred asset class in Italy. Rental residential was voted number one, with 28% of the votes. Last year the participants had logistics/industrial as their favourite asset class, with the private residential sector gaining only 15% of the vote.
Heard in Madrid: “Retail is somehow defensive.” The EPRA conference is the annual gathering of the European listed real estate industry and takes place in early September in a different European capital city every year. If you are involved in the professional organisation, you attend different committees (there is also the executive board meeting on the Tuesday) and have quality time to talk with senior real estate decision-makers. Wednesday is when the main conference event is held, and this year included a great panel on the merits and risks of the listed and non-listed real estate sector. APG, which manages €529bn in pension assets, made things clear: for real estate, listed or non-listed is not the criteria; rather, it focuses first on the team and the strategy – looking for a certain degree of control and not really paying attention to liquidity.
The main takeaway from EPRA, heard in the hallways of the Westin Madrid hotel, came from some seasoned investors in real estate securities. They think the slowdown in the global economy is a risk to the office and industrial sectors. In this context, their view is that continental European retail could show some resilience, some defensiveness. I won’t debate here about the revolution taking place in the retail sector, but I was surprised to see the ‘defensiveness’ argument being put forward. Unibail-Rodamco-Westfield is the leading shopping centres operator listed in Europe, and its stock performance since the beginning of September is striking, with a marked rise. Is this mean reversion? A sector in denial? Or just a genuine new investment thesis forged at the EPRA conference? Continental European retail might well be defensive.
