Capital expenditure on real estate generally has a positive impact on performance, but variations exist by property type and within countries and timing of the capex can also affect results, according to Peter Hobbs, managing director real estate research at MSCI.
Capital expenditure on real estate generally has a positive impact on performance, but variations exist by property type and within countries and timing of the capex can also affect results, according to Peter Hobbs, managing director real estate research at MSCI.
Speaking during a presentation at the INREV annual conference in Barcelona on Thursday, Hobbs said MSCI had conducted a study into how capex affects asset-specific performance. The study, which is due to be finalised later this summer, will offer interesting asset management insights, he predicted. ‘The practical implications for strategic allocations are very important.’
Offices generally attract the highest amount of capex, he added. ‘One exception is industrial in Germany.’
While the US and UK stand out over time in terms of positive performance relative to capex, in the Netherlands the effect appears to be negative, Hobbs said.
He added that further study was needed to determine what the causes were. There is a huge oversupply in the Dutch office market, he suggested. ‘So even if capex has occurred, it doesn’t necessarily help the building.’