‘More capital flows from East and West’

European real estate will continue to attract significant capital flows from the usual suspects but also from new entrants, which means that competition for assets will become even more intense

European real estate will continue to attract significant capital flows from the usual suspects but also from new entrants, which means that competition for assets will become even more intense, delegates heard at Real Asset Media’s Real Estate Capital Flows & Investment Opportunities – German and Italy, which took place at PwC’s headquarters in Milan last week. 

If South Korean investments were the big story of this year, 2020 might see Japan finally stepping into the European market in a significant way.

Christiane Conrads, Head of German Real Estate Desk, PwC Legal AG, Douglas Edwards, Head of Group Equity Raising & Client Services, CORESTATE Capital Group, Gabriele Pompei, Managing Partner PURE Investment Management and Lia Turri, Partner, Real Estate Leader PwC, Italy discuss and compare the opportunities for Real Estate investment in Italy and Germany.
Filmed at the Italy & Germany Investment Briefing, Milan, November 2019 by Real Asset Media

‘Korean investors are being a lot more selective now, but In Japan there is $40 bln and more of capital ready to be invested, said Douglas Edwards, Head of Group Equity Raising & Client Services, CORESTATE Capital Group. ‘They will become significant players in core markets and in residential in the next two or three years’.

Canadian capital, which is already present in France and Germany, will move beyond those two countries in 2020, he predicted. ‘There will be money coming from the Nordics as well and what is interesting is that many are chasing core and core plus, but there is plenty of opportunistic capital as well’.

Capital, especially intra-European capital which accounts for 65% of flows, will

continue to come from all sources, from institutions to retail to family offices. Different types of investors will have one thing in common: they will be more selective and looking for specific assets.

The urbanisation trend across Europe is making residential in all its forms very attractive, but across all sectors the sustainability theme is becoming more dominant. ‘Interest in ESG has increased enormously over the past twelve months and it will continue to grow, because it is driven by regulation but also by investors and by occupiers who want a better working and living environment,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal.

Sustainability is no longer an option but a necessity now. In places like the German cities, where land prices are high and the shortage of assets is acute, ESG requirements can be a catalyst for redevelopment.

‘Germany has a lot of old office stock that needs to be demolished or refurbished,’ said Thomas Veith, Partner Real Estate PwC Germany. ‘This need presents a huge opportunity for investors’.

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