For centuries, coastal cities have been vibrant centres of economic growth. And this vibrancy has always been a magnet for capital, with real estate investors consistently gravitating toward markets on the water. But more recently, growing awareness about the wrath of Mother Nature — increasingly damaging hurricanes, flooding rivers and sinking land masses — is beginning to cause concern.
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For most asset allocators, property or real estate falls under the category of “alternatives”, a group that includes other asset classes or sectors such as hedge funds and private equity. This reflects both the relative size of the asset class as well as the perception of the risks and returns that it provides. But even within the real estate asset class, there are parts of the market that we generally do not regard as core.
A new equilibrium seems to have settled in the European property finance markets. In the United Kingdom, commercial property lending has moved from bank domination through dislocation to a redefined landscape where a broad pool of capital provides debt liquidity to the real estate sector.
The consequences of the troubles in eastern Ukraine are going well beyond that country’s borders and are having an impact both on world politics and on the international financial markets
The real estate investment industry forges ahead and does what it does, seemingly oblivious to the minutiae of European politics; but not oblivious to the continent’s varying underlying economic fundamentals.
London continues to be the most active market in Europe, with investors eager to acquire prime property. In the second quarter, central London property investment totalled £3.38 billion (€4.24 billion), according to Cushman & Wakefield.
The logistics sector continues to be very popular with investors, and a number of high-profile deals have been wrapped up in the sector. According to Colliers International, the European logistics market is characterised by high demand for, and low availability of, high-quality space.
Institutional capital continues to favour large real estate funds sponsored by proven investment managers. Funds that closed during the first half of 2014 totalled $39.4 billion (€30.0 billion), according to the Institutional Real Estate FundTracker database.
A survey of 167 European real estate investors carried out for Union Investment by Ipsos has found that investors have gained confidence from the improving economic situation across Europe and are now prepared to consider adapting their investment strategy by moving up the risk curve and exploiting opportunities in the core-plus and value-add space.
As the summer draws to a close, Rockspring Property Investment Managers has announced the third close for its Rockspring UK Value II fund, bringing total equity commitments to £150 million (€188 million).
European property sales totalled nearly €51.2 billion in the second quarter of the year, according to data from Real Capital Analytics, which tracks properties and portfolios greater than $10 million (€7.6 million).
Lille, the fourth largest metropolitan area in France, is located in the north of the country close to the border with Belgium. Lille’s investment market is predominantly driven by domestic investors, most of whom target prime office and retail space.