© Thomas Laisné
As an active listed property company involved in key European markets, Covivio intends to continue its momentum in 2019. Christophe Kullmann reveals how.
Leaders League. How are you approaching the European real estate market in 2019?
Christophe Kullmann. We are moving into 2019 reasonably optimistically. Optimistic because interest rates should stay low, because of the still large amount of equity that will be invested in real estate, and by virtue of the strength of the real estate markets’ fundamentals: the rise in office rents related to the fall in vacant office space in France and Italy, the influx of tourists into Europe, which should again benefit the hotel industry, the strong rental demand on the German residential market, which is leading to an increase in rental values. Our optimism, however, is tempered by the deteriorating economic, political and social environment in Europe and the historic highs reached by real estate shares in several asset classes.
In your opinion which European real estate markets will be buoyant and which will be abandoned by investors in 2019?
I don’t see any major changes to the situation in 2018. The wait-and-see attitude will prevail in Great Britain because of the uncertainties around Brexit. In continental Europe the appetite of investors for Paris and major German cities in particular will not fade. We are however noting renewed interest from major real estate players for Spain and the Milan market.
What will Covivio’s development strategy be under these conditions?
We will continue to rely on three pillars to further improve our results: Europe, development activity and customer focus. We aim to triple the size of our committed pipeline, currently estimated at 2.3 billion euros with the launch of mixed operations such as our 60,000 square meter high-rise project at Alexanderplatz in Berlin and the N2 - Stream Building program in the ZAC Clichy-Batignolles in Paris.
In parallel, we will make fewer direct acquisitions this year. Given the sector’s growth potential, we will probably focus even more on the hospitality industry. On the sell side, we will continue selling our non-critical businesses, such as housing in France and retail property in France and Italy. Like the 59 B&B hotels and 23 Jardiland stores sold at the beginning of the year, the sale of our non-core assets will also be on the cards, and if the momentum is good we don’t exclude putting mature core buildings on the market. Finally, the service layer is an essential part of our strategy. We will industrialize the development of Wellio, our brand of flexible spaces, and our co-living concept in Germany.