Globalisation works in real estate’s favour

The globalisation trend is working in real estate’s favour, as Asian, American or even Latin American companies that have been investing in other offshore industries turn their attention to the property sector.

'What we are seeing is just the beginning,' said Pertti Vanhanen, global head of property at Aberdeen Asset Management said at PropertyEU’s Global Capital Flows and Opportunities Investment Briefing, which was held in March at MIPIM in Cannes. 'We as a group have just obtained a license in China to raise money, and we expect to have a very busy year.'

Europe's geographical position is also a positive, as investors from both East and West looking to diversify their holdings find it convenient to invest in the centre. 'Europe sits in the middle, so it benefits from the twin capital flows from Asian institutions and US players,' said Tom Leahy, director of market analysis, EMEA, at Real Capital Analytics. 'In 2015 almost 50% of deals involved a foreign player, either on the sell-side or on the buy-side. Europe is becoming an increasingly global market as investors seek diversification. What we have seen so far is just the tip of the iceberg.'

The only risk on the horizon is a change in the interest rate environment, which at the moment looks remote, said Wilkinson: 'Until that happens, Europe is right in the middle and will remain a popular place for foreign investors and will be seen as a safe haven despite some risks on the horizon like Brexit.'

Even the possibility of the United Kingdom leaving the European Union following the referendum scheduled for June 23rd does not worry investors too much, he added: 'Some people will hold back but many won’t. The fact is that investors who have made a real difference to capital flows are not at the end of their journeys and not at the end of the investment programmes that they have set out, so capital flows won’t be reduced.'