Following are highlights of what the representatives from six companies, all active in European real estate investment, had to share with the audience.
M&G Real Estate
“U.S. investors tend to look for high risks and high returns when they go overseas,” said Tony Brown, global head of real estate for London, England-based asset owner and manager M&G Real Estate. “Japanese do the same. It depends on what part of the world you’re from what your attitude is toward international real estate.”
London is still the top city for real estate investment in Europe, but Brexit has had a negative impact.
Brown said there had been almost no overseas investment in London this year due to Brexit uncertainty, but he believes the city presents the “biggest single opportunity in Europe right now.”
The election of a majority Conservative government under Boris Johnson is likely to ease that uncertainty, adding to London’s appeal.
M&G’s focus is the United Kingdom and Europe is part of its international allocation. Brown said there are pockets of strong office rental growth in Europe because not much new space has been created in many CBDs during the past 10 years. In addition some older office buildings are being converted to hotels, or residential uses due to housing shortages in the U.K. and other major cities in continental Europe.
Matthew Richards, chief executive officer of capital markets for commercial property and investment management services provider JLL EMEA, said:
* there’s a “massive focus” on Germany due to capitalization rate compression;
* the story in Nordic countries remains positive, as there are opportunities in Stockholm, Sweden and rental growth remains very strong;
* and France is the “real darling of the market right now” due to macro-economic issues.
Richards said investment in student housing is more than US$10 billion in the United States, US$4 billion in the U.K. and US$1.5 billion in continental Europe. There’s accommodation for just 10 per cent of 19 million European university students, according to Richards, creating an area of opportunity.
Richards said investors looking for opportunistic returns in Europe are focused on development. Sustainability is also becoming more important in European real estate, and should be an investment consideration.
Canadian investors have a close community of people who’ve already invested in Europe. Richards said they should try and use those relationships to learn more about it.
Ivanhoe Cambridgé head of Europe and Asia-Pacific Karim Habra said a common theme in gateway cities in Europe is a shortage of quality space, especially in the office sector.
“Whenever someone’s looking for class-A office space, the vacancy is almost zero. This is true for all of the cities. It’s true for Milan, Madrid, Berlin, Paris and every single city.”
Habra said Montreal-headquartered Ivanhoé Cambridge can invest and create value in different ways in Europe, including buying properties directly, setting up platforms and doing joint ventures.
“We wouldn’t do small investments if we didn’t see any growth. In some sectors you’re not going to find critical mass from Day One, so we bet on platforms with operating partners that we can help to grow in the future.”
Ivanhoé Cambridge invests in operating businesses as well as real estate in Europe.
“We will not buy stand-alone hotels because we don’t feel that they capture the full value,” said Habra. “So we go and buy the whole company. We buy the know-how, the rent, the people, the assets and the pipeline. In this way we capture the whole value-creation chain.”
Habra emphasized foreign investors must go into Europe with passion and conviction or they’re wasting their time in the competitive real estate market. He suggested focusing on fewer strategies and ensuring they have the right partners early in the process.
Habra’s final recommendation was to see Europe as a diversification play; and not compare returns and investment strategies with their home markets.
Apache Capital Partners
Apache Capital Partners co-founder and managing director Richard Jackson said Brexit concerns have left some potential investors sitting on the sidelines.
The London-headquartered private real estate investment management firm has multifamily, single-family and seniors living platforms. He said they’re supported by long-term demographic trends, and an increasing number of people are renting for affordability and lifestyle reasons. Jackson believes these defensive investments are recession-proof because people will always need a roof over their heads.
Apache has a pipeline of 6,000 multifamily units and is developing class-A-type products, which hasn’t previously been done in the U.K. Jackson said 14 million people rent housing in the U.K., and that will increase to 17 million by 2025.
Jackson noted just one per cent of residential rental properties in the U.K. are owned by institutions, although that is beginning to rise. Large-scale multifamily residential owners in the U.K. have a lot to learn from their counterparts in North America, where the sector is more established.
“We’ve set up our own operational platform where we’ve trained our own staff that come from a range of property backgrounds and hospitality backgrounds to try and instil that culture and genuine service,” said Jackson.
Rebekah Tobias is the head of business development for MARCOL, a family office that’s acted as an owner, operator, developer, asset manager and joint venture partner in the U.K. for 44 years. She said the firm, which has four European offices, has flexible capital without return criteria and doesn’t need to deploy funds within any set period of time, which allows it to be extremely selective.
“We can take a lot of risk on the operational side of the business, which is where we really find value and where we can create value. We’re not buying stabilized assets. That’s never really been a strategy of ours.”
Tobias said MARCOL didn’t sit back and wait for Brexit the situation to become more clear.
“We’ve seen yields in London that look incredibly cheap compared to the rest of Europe,” she said.
Tobias said multifamily residential is becoming a much bigger asset class in the U.K. MARCOL is also now backing a co-living platform, which bridges the gap between student housing and the multifamily residential market.
MARCOL is doing more in the healthcare real estate space to diversify its portfolio and realize growth opportunities. It’s backing a self-storage operator in Germany and building new sites in growth markets there.
“You just have to be able to roll your sleeves up and get your hands dirty with a lot of these platforms, and obviously back the right people to be able to deliver the strategy,” said Tobias. “If you have a unique skill set in a growing sector in the U.S., there’s a significant opportunity to bring that to Europe.
“But you have to be very mindful of the nuances and cultural changes and mentality, in particular as it relates to city, country and Europe as a whole.”
AXA IM – Real Assets
AXA IM – Real Assets provides investment capabilities in equity and debt, across different geographies and sectors, via private or listed instruments. It manages €15 billion in residential assets including student accommodations, multi-family residential and seniors housing in 11 countries.
Global head of research and strategy for real assets Justin Curlow said these defensive housing investments are underinvested in Europe. This “provides an attractive opportunity to build scale and build on the inefficiencies and build relationships with those standing operators, to really grow this sector into what we see is already a well-established sector in the U.S.”
European real estate investment is fragmented, less transparent than in North America, and difficult from regulatory and legal standpoints. That makes having a local presence, knowledge, and relationships all the more important, Curlow said.
Canadian Commercial Real Estate Industry Offers Support to National Vaccination Efforts – Canada NewsWire
TORONTO, Jan. 20, 2021 /CNW/ – REALPAC and its member organizations are pleased to announce an industry initiative to support the national vaccination rollout, through providing governments and health networks across Canada with the free use of vacant commercial space (such as retail space in malls, big box space, conference centres, hotels, industrial units, parking lots and office buildings) for use as vaccination sites.
“We see every day how hospitals are facing increasingly fragile scenarios, with provision of vital services being put on hold to divert resources to the COVID-19 response effort,” said Michael Brooks, CEO, REALPAC. “We also understand from governments that for Canada to successfully vaccinate its population by the intended September 2021 target, a very regimented approach will need to be taken.”
REALPAC, in partnership with its member organizations, has undertaken an initiative to identify unused commercial real estate space across Canada, to make available for free to governments and health networks to assist with the logistical rollout of COVID-19 vaccines. The goal is to provide an easily scalable portfolio of real estate assets that can form part of Canada’s distribution network to support the country’s vaccine mobilization effort. As reported by the BBC, a similar process is seeing success in the U.K., where the government is repurposing spaces such as convention centers and halls to serve as vaccination clinics.
REALPAC has secured the support of numerous CEOs, CFOs and COOs in its membership to participate in this initiative. These real estate owners are large, national operators with considerable real estate assets from coast to coast to coast, and are willing and eager to loan free space to government.
Participating members confirmed at this time include:
“Activating vacant real estate space as clinics for either vaccination or other medical services could reduce the logistical burden on hospitals and healthcare settings,” added Brooks. “REALPAC members are keen to work with the government to repurpose their unused spaces to function as vaccination sites, or storage spaces for vaccines, essential equipment, and medical supplies, which could greatly assist the vaccination rollout effort.”
REALPAC welcomes the opportunity to discuss this initiative with governments, policy makers, public health officials and healthcare networks, and direct inquiries to our participating members.
The commercial real estate industry remains committed to working with governments and healthcare networks to identify areas where space is needed and meet their needs to the best of our abilities. The industry would also like to sincerely thank governments, healthcare providers and front-line workers for their continued efforts to support Canadians during this pandemic.
Founded in 1970, REALPAC is the national leadership association dedicated to advancing the long-term vitality of Canada’s real property sector. Our members include publicly-traded real estate companies, real estate investment trusts (REITs), pension funds, private companies, fund managers, asset managers, developers, government real estate agencies, lenders, investment dealers, brokerages, consultants/data providers, large general contractors, and international members. Our members represent all asset classes in Canada – office, retail, industrial, apartment, hotel, seniors residential – from coast, to coast, to coast.
For further information: on this initiative, please contact: Michael Brooks, CEO, [email protected], 416.642.2700 x225, www.realpac.ca
Planon acquires a majority stake in real estate software company Reasult BV – Canada NewsWire
NIJMEGEN, Netherlands, Jan. 20, 2021 /CNW/ — The Planon Group and Reasult today announced that Planon has acquired a majority share in Reasult B.V., founded in 2000 and headquartered in Ede (the Netherlands). Reasult is a software company that optimizes the financial performance of real estate portfolios and projects. Reasult’s leading software solutions are used by real estate developers, asset managers and housing corporations in the Dutch- and German-speaking markets. Example customers are Amvest, a.s.r. real estate, VolkerWessels and HANSAINVEST.
The Reasult software suite includes solutions for real estate development, asset- and portfolio- management, valuation management and financial planning. Planon will combine the Reasult applications with its own solutions for asset management and tenant management and engagement, into one software suite. By doing so, Planon aims to support real estate owners and investors in optimizing the performance of their property portfolio from a financial, building operations and tenant engagement perspective.
“This acquisition is one of the first steps in Planon’s ambitious goals to accelerate its future growth. Planon firmly believes in the strength of Reasult’s solutions and its organization, both from a technical perspective and due to its extensive market knowledge and experience. It is therefore Planon’s plan to continue to expand the Reasult software suite, as it has done with previously acquired solutions such as SamFM and conjectFM. I am very excited about this acquisition and the possibilities it will offer to customers of both organizations to further develop their current solutions into an end-to-end property portfolio management solution,” said Pierre Guelen, CEO and founder of the Planon Group.
“As co-founder of Reasult 20 years ago, I am very excited about becoming part of a fast-growing global specialist in the field of building operations and service digitalization. With this move, Reasult will be able to further fulfil its strategy of offering a leading platform for optimizing real estate in the broadest sense. As part of a market leading organization, our customers and employees will benefit from this strategic step. The Planon and Reasult solutions are complementary which drives synergy and innovation. This collaboration will allow us to serve our customers in the best way possible and deliver innovative products to help real estate companies be ‘the best in class,'” said Aart Zandbergen, CEO at Reasult.
Medicine Hat's real estate market holds steady in 2020 – CHAT News Today
But as far as sales go, it’s very close to the city’s standard and is comparable to the 10-year average.
House prices have even gone up a little bit. Devine says the 6 percent increase is due to the cost of the new and bigger houses being built.
Meantime, the average residential home price is almost $300,000 for homes in Crescent Heights, Crestwood, and Ross Glen.
Relatively speaking, Devine says our city has been fairly stable during COVID-19 in the housing market and it hasn’t changed a whole lot.
“I think overall, people that have money still have money. COVID doesn’t affect those people too much. Working people, obviously the interest rate makes a big difference. For young people buying their first homes, interest rates make a big difference. I think due to the diversity of Medicine Hat and the economy here I think that’s why there are so many people buying and getting into starter homes.”
Devine expects 2021 to be a busy year for Medicine Hat in the real estate market
“I think the biggest factor is going to be probably people wanting to get out of cities and to a city of our size that has a lot to offer and has room to basically spread out and people aren’t so congested. I think it will be a very good thing for the city a size of Medicine Hat.”
For the December 2020 market trend summary from the Alberta Real Estate Association visit this link.
And as far as real estate goes, Devine says Medicine Hat is probably one of the most stable places in the country.
“Due to the diversity of the city. Obviously, the oil patch has an effect on us, but the size of the city is very good, farming and ranching community, manufacturing community, we have a lot of different things going for us in this area, so it works really good for the real estate market and keeps it very stable.”
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