Technological development and its disruptive effects are beginning to have an impact on institutional real estate strategies, it was suggested at a gathering of major sovereign wealth and pension funds.
Approximately 60 representatives of institutional investors congregated at the MIPIM RE-Invest summit in Cannes, France on Tuesday morning to discuss a number of issues.
Conversations at the closed-door summit, held at the start of the MIPIM trade fair, often revolved around the risks posed by technological advancement and there was a recognition that the industry needed to increase its expertise in the area.
A live poll of the audience found that 55% of investors had changed their investment strategies due to the potential impact of technology over the next 10 to 15 years, while 40% planned to do so in the future.
One participant said it was important to recognise that many investor and fund management organisations were unlikely today to have the necessary resources to address technological disruption.
One of the table moderators, Andy Pyle, UK head of real estate at KPMG, said discussions revealed that investors were increasingly looking to future-proof assets and locations, particularly in relation to offices.
He said the question of whether investment teams were set up sufficiently to deal with the future challenges of technology arose several times.
Ciaran Carvalho, partner at CMS and another moderator, said there was a recognition that while “the future of offices was not dead”, landlords needed to be adaptive.
Andrew Stainer, global head of asset management at AXA Investment Managers–Real Assets, said the real estate industry tended to be relatively “slow” and less “agile” because it was so capital intensive, but its customers were expecting more. The big risk, he said, was an acceleration of obsolescence.
Andrew Allen, head of global property research and strategy at Aberdeen Standard Investments, said the focus for large investors was on creating dominant real estate that was inclusive and sustainable – not necessarily targeting one type of age group.
The assumption that urbanisation was a one-way trend was also questioned. Jose Pellicer, head of research at Rockspring Property Investment Managers, said investors were seeing an increase in “suburbanisation”.
As long as suburban locations were sustainable and supported by infrastructure, they should be on the radars of investors, he said.