Institutional Real Estate Europe

July 1, 2024: Vol. 18, Number 7

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From the Current Issue


Sizing up the opportunity: Opportunistic strategies are on the move again — but they remain as risky as ever

How often do investors find the perfect entry point in real estate — that moment when you can buy cheaply during a downturn yet still feel confident of a healthy return when prices bounce back, which they could do fairly quickly? In truth, very rarely. Now, however, could be one of those junctures in the current cycle. Recent changes in the real estate landscape are now creating these opportunities, and this, in turn, is shining a spotlight on opportunistic funds.


Capital gains: London’s office rental market offers new investment opportunities

Despite the weak UK economy, financial sector company relocations and the general trend towards remote working, London’s office market offers attractive opportunities for real estate investors. The metropolis on the river Thames enjoys comparatively robust office rental markets in the prime segment, along with historically high yields. This situation is primarily down to the office market undergoing significant change.


Stacking up: Data centre investment is a megatrend rather than a fad

Data centre investment is a megatrend rather than a fad. Unlike the classic real estate types of office and retail, they actually benefit from the digital transformation. Steadily growing data volumes generate a proportionate increase in data centre capacities — and so the market is booming. But caution is still needed, as the market in Germany shows.


Leading lights: The next few years will prove to be a great vintage period for the light industrial sector

Traditionally, institutional investors targeting the logistics and industrial sector have preferred to invest in larger warehouses. But there is also a large market segment that consists of smaller to medium- sized warehouses with a tenant base that consists predominantly of small and medium-sized enterprises. These provide ample opportunities to exploit historical undermanagement of very good quality buildings with a potential to drive rents.


Might as well face it: You’re addicted to …

If you’re like most of the people in this business, you rely on spreadsheets for just about everything you do. This means the opportunity to make mistakes based on faulty data is amplified. So, what’s the solution? As I have noted in this column before, the solution is the industrywide adoption of a uniform system that everyone in your organisation uses and relies on that eliminates their reliance on spreadsheets with all of their inherent inconsistencies and nonstandardised ways of carrying and processing information.


Light at the end of the tunnel: The European office and industrial sectors could be signalling signs of recovery

Despite a subdued start to 2024 across Europe’s office and industrial markets, the prospect of falling interest rates, accelerating economic growth and opportunities from long-term shifts in demand, give cause for optimism. The Society of Industrial and Office Realtors (SIOR) recently conducted a survey of its European membership to gauge the outlook for the office and logistics sectors, and some of the key results within the context of current market performance provide further ground for optimism.


Second consecutive year of AUM contraction for managers

Total global real estate assets held by fund managers fell for the second consecutive year in 2023. The ANREV, INREV and NCREIF 2024 Fund Manager Survey shows that assets under management (AUM) in the global nonlisted real estate industry dropped to €3.7 trillion in 2023, a 3.8 percent decline from the €3.9 trillion reported at the end of 2022. In 2021, AUM among fund managers surveyed by the three real estate investment associations reached €4.1 trillion.


Gradual recovery in European office market continues

The European office market is gradually recovering thanks to a stable vacancy rate, rising prime rents and a consolidation in take-up, says BNP Paribas Real Estate. Figures from the manager, covering 29 European countries, show that the overall vacancy rate in Europe remains stable at 7.6 percent.


European logistics to deliver best risk-adjusted returns

The European logistics sector continues to experience robust demand and will deliver the most favourable risk-adjusted returns among the four major property types, says Clarion Partners. In a white paper on the sector, the manager has identified ecommerce, shifting supply chains and a lack of modern stock as the main drivers of logistics returns in the near to medium term.


“Green skills” gap a hurdle for office stock improvement

The “green skills” gap has become a large hurdle for owners who are attempting to improve their office assets. Westley Thurley, European real estate segment leader at Schneider Electric, has warned that European office markets that are racing to meet upcoming new sustainability and energy performance standards could find their efforts hampered by a lack of green technology engineers.

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