Institutional Real Estate Europe

March 1, 2025: Vol. 19, Number 3

$25.00 Add To Cart

From the Current Issue

Europe

Hidden in plain sight: European offices are now an overlooked value-added opportunity

Prime offices have seen yields correcting by almost 40 percent since the peak of the last cycle. The sector has been affected by concerns around its structural fundamentals in the context of the acceleration of hybrid working. A sector which previously accounted for more than 40 percent of European transaction volumes has faced a liquidity crunch, resulting in this halving in 2024, as investors have pivoted to sectors with stronger fundamentals. However, as always, the situation is nuanced. A couple of years on from the COVID-19 crisis, working practices continue to evolve, but there is a clear trend towards office occupancy rates approaching pre-pandemic averages

Europe

Breaking the illusion: Building certifications have been under fire for various perceived failures. Can trust in them be restored?

In December 2024, GRESB announced it had come up with a fresh set of requirements for building certification. The ESG real estate assessor and benchmark provider said the new conditions would improve the standard of the certifications it uses to examine the sustainability credentials of real estate portfolios. The move came after a lengthy consultation period launched in early 2024, which signalled that long-standing complaints about certifications were being taken seriously. Chief among these grievances was a lack of harmony between certifiers and the proliferation of new schemes during the past few years

Europe

The future of the ODCE: As the index expands its inclusion of alternative property types, diversified funds have a new reason to shine

Open-end diversified core funds, such as those tracked in the NCREIF Fund Index — Open-end Diversified Core Equity (NFI-ODCE), remain a compelling investment vehicle for institutional investors seeking exposure to private real estate. Their enduring appeal can be attributed to several key factors: immediate investment access, broad diversification, high-quality properties, conservative management practices and low fees. These characteristics make the NFI-ODCE funds an attractive base for real estate portfolios, offering a solid foundation that investors can build upon with additional, more specialised strategies. But in the post-pandemic era, concerns about valuation and performance have seen investors heading toward the exits, and redemption queues have become substantial

Europe

High-end living: The evolving landscape of luxury hospitality and residential real estate is a compelling investment play

As we progress into 2025, the luxury real estate segment — especially hospitality and residential assets — offers compelling opportunities, underpinned by the growth and diversification of global wealth. Luxury real estate assets rooted in prime locations, with unparalleled attention to detail, and exceptional personalised experiences, will see both robust demand and untapped potential

Europe

Ding! The starting bell for investment has begun to ring

For those of you who were waiting for the bell to go off signalling that the real estate markets finally have hit bottom, you may not have been listening carefully enough. At our third quarter NFI-ODCE update webinar this past December, Garrett Zdolshek, CIO and portfolio manager for Accordant Investments and IDR Investment Management, noted that recent property sales transactions executed by NCREIF Fund Index – Open End Diversified Core Equity fund managers have all (for the most part) closed at, or above, their carrying values

Europe

The mass timber trade-off: Would high-rises made of wood be sustainable?

A material that’s been around since people built shelters — wood — is increasingly being proposed for low- and mid-rise buildings. Companies behind these “mass timber” projects say wood is a lower-carbon alternative to steel or concrete and brings other benefits, such as faster construction time and lower cost than concrete and steel. Advocates say the wood product, made of compressed layers, offer good fire safety as well. Any increase in the use of wood in buildings is positive for reducing the substantial carbon footprint of buildings. But it is critical to consider where wood is sourced and whether forests are managed sustainably

Europe

Global investor allocations edge closer to targets in 2025

Investor allocations into real estate have aligned more closely with target levels globally, according to the 2025 Investment Intentions Survey — published by INREV, ANREV and PREA. The average current allocation to real estate globally stands at 8.7 percent, just below the average target of 9.0 percent

Europe

Mass-remote working was an aberration, says Zurich

In hindsight, mass-remote working was an aberration and the death of the office segment was woefully oversold, says Zurich Insurance Group in a new study. The insurer says much more appetite for offices is expected in 2025 as employers wrestle back control of hybrid working patterns and bring more employees back into the office for large parts of the week. Remote working was “born out of necessity, indeed survival,” says Zurich in Outlook for Real Estate Investments: “Divergent Paths at an Inflection Point”.

Europe

UK bodies must work together to drive adoption of proptech

A new UK report outlining the role proptech can play in unlocking growth in the real estate sector has called for the establishment of public and private partnerships to test new proptech tools, as well as the creation of a cross-parliamentary proptech innovation service to accelerate the use of new technology

Europe

Global logistics rents declined by 5% in 2024

Global logistics rents declined by five percent in 2024 due to normalising market conditions, according to a new white paper from Prologis. The manager says an influx of new supply — coupled with positive but subdued demand rooted in economic, financial market and supply chain uncertainty — pushed vacancy rates up in most markets across the globe. As a result, rents have fallen after more than a decade of consistent growth

Europe

Migration of back-office investment operations to continue

Investment managers are continuing to migrate and consolidate their third-party services as they attempt to become more efficient. Anita Lyse, head of real assets in Europe for Alter Domus, says the fund administrator saw a marked increase in mergers of outsourced operations during 2024 and expects to see further consolidation in 2025, even as the market picks up

Europe

PATRIZIA launches third affordable housing joint venture

PATRIZIA has launched a joint venture aimed at repositioning obsolete offices into affordable housing across Benelux. The JV is the third such programme undertaken by the manager, following partnerships in the United Kingdom and Ireland, under its Sustainable Communities scheme

Europe

From the start: Embodied carbon is the next frontier for the decarbonisation of real estate

In recent years, the real estate sector’s efforts to tackle climate change and reduce emissions have focused on lowering the footprint of operational carbon. But now, investors’ and investment managers’ attention is shifting towards embodied carbon. Embodied carbon (the carbon footprint of a building before it becomes operational) can account for up to 50 percent of a new building’s lifecycle emissions and 10 percent of global emissions. Many investment managers are looking for guidance on how to incorporate embodied carbon into their net-zero strategies, cutting the overall carbon footprint of their assets.

Forgot your username or password?