WHERE ARE THE NEXT CORE AND VALUE-ADD OPPORTUNITIES FOR REAL ESTATE INVESTORS IN EUROPE?
Haakon er leder for analyse og verdivurdering i Malling & Co, og har jobbet med næringseiendom siden 2010. Han har en mastergrad innen Industriell økonomi og teknologiledelse fra NTNU i Trondheim, og har senere fullført AFA-studiet ved NHH.
Offices, office developments and office refurbishments continue to offer opportunities for core and value-add real estate investors in Europe, according to international real estate advisor Savills.The sector is boosted by business expansion, employment growth and a significant need for modern premises. In certain countries, other asset classes including hospitality, the private rented sector (PRS), student housing and care homes could attract investors. The key themes as the cycle prolongs are rental growth, opportunities from developing or re-positioning properties and locations as well as long-term income both from traditional property types and alternatives.
Lydia Brissy, Director, European Research, Savills, says: “We are seeing that prime CBD offices will continue to offer opportunities for core investors in Amsterdam, Athens, Brussels, Copenhagen, Lisbon, London, Luxembourg, Milan, Oslo, Paris, Prague and the top German, Polish, Swedish and Spanish cities. Those looking for value-add opportunities could consider PRS and retail in regional cities in Austria and Dublin as an interesting investment opportunity as well as office refurbishments in the suburbs of Brussels, Paris and Prague.
“Other value-add opportunities exist in the care home sector in Denmark, logistics and retail (parks) in Poland and Sweden, prime high street refurbishment in Milan and Oslo, hospitality in Greece and student housing in Amsterdam. Another interesting value-add opportunity we have identified is the (re)development in cities with strong urbanisation, hubs of innovation and brainpower such as Lisbon, London, Paris, Amsterdam, Berlin, Bucharest, Frankfurt, Barcelona, Copenhagen, Stockholm and Dublin.”
According to Savills, real estate remains an assets class of choice in Europe and the amount of capital invested in the real estate market remains significant. The spread between the average 10 year bond yield and the prime office yield is at 248bps (Q2 18) compared to 180bps in 2008 and a 10-year average of 237bps. In strong markets, the number of underbidders for large deals exceeding €500m generally ranges between three and five. For smaller investments (<€100m), it generally ranges between 10 and 15. Some European markets also recently witnessed an increasing number of off-market deals, revealing sellers’ confidence in finding the right offer.
Marcus Lemli, head of Savills European investment, says: “Europe remains an attractive investment proposition for investors, supported by an expanding economy, low unemployment and healthy occupier demand for both traditional and alternative building uses.
“Based on our Q1-Q3 2018 preliminary figures we expect Ireland, Poland, Portugal and Greece to stand out showing strong annual increases of approximately 80%. Investors into European real estate continue to focus on the core markets which still account for 67% of the total investment volume in Europe in line with previous years and are increasingly looking for opportunities in the other markets. While we expect offices to remain the asset class of choice despite compressing yields, investors who are happy to look at countries on a city and asset level, are still able to find 5%+ yields in Europe.”