Diversification of Our Asset Allocation is Our Watchword for 2019

Amundi has been in the top tier of European real estate asset managers for many years now. That looks set to continue in 2019.

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Amundi has been in the top tier of European real estate asset managers for many years now. That looks set to continue in 2019.


Leaders League. How is 2019 shaping up for the European real estate market? 
 

Jean-Marc Coly. We are cautiously optimistic. That said, the spectre of an increase in interest rates or less than expected growth in the European economy means we must temper our expectations. 
From a micro economic point of view more and more capital is looking to invest in the European real-estate markets with the result that competiton is now fiercer than ever and prices have skyrocketted. 
This situation, however, speaks to the confidence that investors have in the European market at the moment. 
What’s more, we have started 2019 under a better set of conditions than was the case  twelve months ago, when the market was dealing with new taxes on real-estate derived wealth. It is the ambition of Armundi Real Estate to raise between 1.8 and 2.2 billion euros from our retail clientele and hope to collect between one and two billion euros from institutional players, depending on the opportunities that arise. We hope to launch a real-estate product and distribute it throughout our network in Europe.   
  

 

Which real-estate markets will continue to attract investors in 2019 and which will be less in demand?

 

France and Germany are still the top two markets in terms of attractiveness, size and liquidity. We are allocating the lions share of our investments in these two countries  as they represent an important growth lever, notwithstanding the squeeze on the rate of returns we are seeing on these markets. 
We are also active in peripheral markets, such as Belgium, the Netherlands and Austria, whose economies are robust and where returns are higher. At the same time we aim to invest in locations with potential for significant increases in rent, such as Madrid and Barcelona in Spain. On the other hand, we do not envisage any significant changes in policy toward the UK in the short term. We sold all the assets we posessed in the market in 2018. When the dust settles on Brexit, and the uncertainty that exists surrounding long term property values, we will look at the UK once again. We continue to pay close attention to changes in the economic and political environment in Italy. Although the fundamentals there are solid, only Milan is on our radar for the moment.

 

What are the main investment strategies of Amundi Real Estate in light of the current state of the market?

 

Diversification of our asset allocation is our watchword for 2019. Investments in our core offices represent once again the main part of our activity, as they insulate us from further interest rate increases and put us in a position to capitalize on higher rents when economic conditions improve. At the same time we are also looking at other types of assets, such as hotels in major European cities, managed residences and logistics properties. We will not hesitate to make purchases of residential or retail property, should the right opportunity come along. It’s worth noting that between 15% and 20% of our property investments are spent on buildings that have not yet been completed, without necessarily benefiting from pre-commercialization to capture the equity risk premium. We should make in the region of two billion euro’s worth of acquisitions this year, and we hope to close around 500 million euros in sales  between now and December 31st, having divested ourselves of one billion euro’s worth of assets in 2018.    

 

François Perrigault

Read the full Special Report: MIPIM 2019 - Cannes

When is the cycle going to end? While the question has been discussed at length by real estate professionals in recent months, the general consensus seems to be ‘no time soon’. Several of the leaders interviewed for this special report have committed their companies to targeting core office properties to hedge against a possible market downturn. That is just one of many strategies being deployed by investors in Europe in 2019. Leaders League gives you a 360-degree perspective on the state of play in the industry today, in the company of its main players.
Summary MIPIM 2019 Round-Up Allianz Real Estate is Working on Its Asset Pool to Create Value AXA IM-Real Assets Expects to Remain Active Across the Entire Risk Spectrum Paref’s Strategy Rests on Three Principal Pillars La Française Aims to Redirect its Focus to Interconnected Urban Centers AEW Favor Core-plus and Value-added Strategies We Invest in Products That are Core/core+ With a Long-term Approach Primonial is in Lockstep With Developments in the Market Covivio Will Use Three Pillars to Further Improve Results

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