A surge in capital targeting Europe is forcing institutional investors beyond core products to core-plus and value add property, delegates at PropertyEU's recent Asset Management Briefing heard.
A surge in capital targeting Europe is forcing institutional investors beyond core products to core-plus and value add property, delegates at PropertyEU's recent Asset Management Briefing heard.
Earlier this month, DTZ’s Wall of Money report suggested that investment in commercial property in Europe would rise 22% from 2013 to 2014, and a further 20% next year.
‘There is €175 bn coming this year and €210 bn next year, according to DTZ,’ said Norbert Rolf, head of the property companies division of developer Strabag.
‘We mostly deal with core, institutional investors and we’re not often asked to bring more value to a property, we just have to keep it to a very high level. But times are changing and our investors are looking to more core-plus, value add investments,’ he said.
As the core ‘trophy assets’ get snapped up, and institutional money moves slowly up the risk ladder, more asset management is required, explained Etienne Dupuy, a senior director with Invesco.
‘It's about managing the imbalance in some markets in Europe between strong capital pressure to invest versus a tenant demand which is relatively subdued,’ he said. ‘But as systems and tools grow in quality, we will spend more time interacting with tenants and so on, will get more information about quality of service.’
Quality of management systems was a recurring theme during the briefing, and according to Rolf, ‘if we look for challenges, the biggest is: are we really ready to create efficient management systems between us and investors. It’s something that’s a challenge for us all.’
Roland Holschuh, a member of the Commerz Real management board, continued the theme. ‘Having a good system does not win you a tenant,’ he said, ‘but having a good system makes sure your people who win and chase tenants are not distracted from their job by managing daily tasks.’