In the last three years, Munich’s Expo Real has become the hub of capital markets activity for European real estate, with Mipim a glamorous alternative more focused on development and regeneration.
To take the pulse of continental investment markets – and to understand how global investors view Europe – a trip to Expo is invaluable.
Below I list my 10 key takeaways.
- • Expo Real in 2008 was one of the grimmest occasions anyone in European real estate can recall, and is vividly recounted in a new book, High Rise and Fall: The Making of the European Real Estate Industry by Women Talk Real Estate director Andrea Carpenter. A decade on, so much has changed. This is now a far more robust, less reckless world.
- • The last few years at Expo have been buoyant but 2018 seemed particularly so, with more assets being offered by brokers than in previous years. Some schemes described as Core would have been more accurately described as Core Plus, however.
- • British delegates among the 47,000 visitors fielded a raft of questions on Brexit, with investors cautious about the UK’s prospects and lenders more sanguine. For many, real estate debt looks to be a better proposition than equity for now.
- • There was a widespread acceptance that we are at a very mature period in the property cycle, even if there is lots of capital still available to deploy. It is investors’ recognition of this that is supporting interest in debt strategies.
- • Some assets are still very attractive to investors. Alternatives that trade in low volumes, which are hard to buy and provide diversification continue to appeal – especially when they also provide long-term, secure income streams.
- • Intriguingly, while there is concern over the future of retail property, some investors are waiting for an opportune time to buy these assets in their search for higher returns. People will continue to visit shops for decades to come. For the right price, and with potential for change of use or partial change of use, retail real estate will begin to appeal.
- • In terms of where to buy, Germany is now seen as hot, with value hard to find and investors having to look further up the risk curve.
- • Asian capital is continuing to gush in across the UK and continental Europe, with South Korean and Japanese investors leading the way.
- • Interest in technology remains intense. It was interesting to see the level of interaction between investors, occupiers and the new breed of tech companies.
- • There was a general acceptance that key cities in Europe will continue to prosper as long as they are supported by good infrastructure, strong demographics and progressive policymakers.
That is very much in line with our strategy at Aviva Investors Real Assets. In May, we created AIRA to bring together our skills in real estate, real estate debt and infrastructure in response to growing client demand for private assets. This year, we had our debut at Expo Real with this team.
Our focus is on buying in and lending against durable assets in thriving cities and locations where highly skilled people want to live, work, play and learn.
Some of the most fascinating discussions we had at Expo itself and at the Sofitel near Munich station, where delegates gathered at the end of the day, were around more complex solutions at the end of the cycle.
I will stick my neck out with my 11th and final Expo takeaway by predicting more merger and acquisition and joint venture activity as investors seek to extract value in a market where value is increasingly hard to find.