The investment climate was a key talking point at this year’s EXPO REAL. On the one hand, those delegates focused on Europe said they were busy navigating what investment professionals are calling ‘the approach of a late stage in the cycle’. The prevailing view was that the current buoyant trading momentum seems likely to continue through the end of the year, as some degree of urgency is required to complete transactions before 2019.
New investment record in Germany predicted
Investors are displaying ‘a very positive attitude’ towards assets in the larger mainland European markets, CBRE’s Jonathan Hull told PropertyEU. ‘We are seeing bidding profiles for quality assets broaden out in markets such as Germany, France and Spain, all of which possess deep pools of capital,’ he said.
During Expo, both JLL and Colliers International predicted that investment volumes in the German market will reach around €60 bn this year – another record level – due to strong demand from international investors. Foreign investors are likely to deploy similar levels of capital to 2017, when they accounted for 45% of the €56.8 bn of total investment, according to JLL.
Who profits from Brexit?
Despite a looming deadline and crucial talks in the months ahead, Brexit was not the dominant talking point at EXPO REAL this year. Some experts even played down its impact for the UK and London market in particular. ‘Tenants as well as investors are seeing though the noise and political mess of Brexit, which has not affected the occupier market at all,’ said Julian Agnew, UK chief investment officer at La Salle Investment Management. ‘Demand is strong and supply is low, especially in the City, and this is driving capital to begin refurbishment and invest in value-add assets.’ Even a hard Brexit would have a minimal impact on London, noted Simon Wallace, head of research alternatives for Europe at DWS.
Nonetheless, some observers say European capitals are already benefiting from a migration by banks and companies towards the Continent. ‘Frankfurt is really benefiting from the Brexit effect. We’re not seeing big companies move here, but we are seeing banks like JP Morgan and Credit Suisse increasing their existing office space by between 20% to 30%,’ said Nico Keller, head of investment for Germany at BNP Paribas Real Estate.
‘Frankfurt is one of the cities best placed to benefit from Brexit,’ said Eric Menges, CEO of international marketing of the FrankfurtRhineMain region. ‘And despite what the brokers are saying, Frankfurt has ample office stock to cope with increased demand.’