Isabelle Scemama, CEO of AXA IMRA, expects logistics property and the wider alternatives sector to continue their outperformance in 2018.
Which trends and developments do you hope for most for your business in 2018?
We hope for, and in fact expect, a continued global economic expansion that is not disrupted by a disorderly unwinding of quantitative easing. In this context we think real assets will continue to screen well versus more traditional asset classes with the European property markets well placed from a cyclical perspective.
We continue to expect logistics to outperform the more traditional commercial real estate sectors. Burgeoning demand generated by e-commerce continues to outpace new supply and supports both new development – notably in Europe which significantly trails the well-developed US market – as well as standing investments which continue to offer a yield premium.
We also expect to see continued outperformance in the wider alternatives space as capital is increasingly targeting sectors less aligned to the traditional business cycle.
What do you fear the most in the coming year?
Putting capital to work in real estate will remain a key challenge in the coming year as yield compression has largely run its course with investment markets no longer differentiating between prime and secondary assets and locations. This will make it increasingly difficult to find investment opportunities which adequately compensate investors for the inherent risk levels.
Will you be expanding or scaling down in 2018?
Global expansion will continue to remain at the heart of our strategy for 2018 and we are looking at opportunities to further expand our real assets platform in the US and Asia. As the leading investor in the European market, we will continue to be active in this region.
What is set to have the biggest impact on your business?
We believe that a combination of potential interest rate moves, Brexit, technology, and geopolitics may all have an impact on our industry in 2018.
What will trigger the next downturn in real estate?
My hope is that the industry is in a far better and more conservatively leveraged position than it was at the time of the Global Financial Crisis, enabling it to withstand major disturbances. That said, in this position of considered preparedness, the next downturn is most likely going to be something that almost no one has thought of. The best that we can do for our clients is to continue pursuing our prudent research-led investment approach and offering diversified opportunities across both asset class and geographies.
