[b]The Year of the Horse[/b]
The Year of the Horse
You don’t need a crystal ball to guess what will likely shape up to be one of the key trends for the European property sector in 2014. Indeed, every self-respecting adviser and fund manager is forecasting that more Asian and US capital will head towards European real estate in 2014. In this Year of the Horse, Chinese capital in particular is seen picking up pace. Europa Capital has already waged its bets: the fund manager is teaming up with Beijing-based advisory firm Ilex Partners to boost investment from China’s leading institutional investors, life insurers and property developers into European real estate. Although much of Chinese investment activity has so far been focussed on the UK, in particular London, Europa Capital’s founding partner Charles Graham is betting that the focus will steadily broaden to encompass mainland Europe.
German lender Helaba is forecasting a bumper year for property loans next year as partnerships with Chinese institutional investors move into its sights. Asian capital is already making waves in the financing sector. Our roundup of the top financing deals in H2 2013 reveals that a syndicate comprising Malaysian banks CIMB and Maybank, Singapore-listed Overseas-Chinese Banking Corporation (OCBC) Bank and Standard Chartered provided the biggest credit facility over the period – a €948 mln loan extended to a Malaysian consortium backing the Battersea Power Station development in London. Chinese capital has already been signalled at hotel developments in the UK capital and it is only a question of time before Chinese financiers follow suit. Hotels have also captured the fancy of Internos Global Investors: the London-based company plans to launch a follow-up fund for its inaugural hotel investment vehicle.
The move marks a new phase in its evolution as a fund manager. Another key trend to watch this year is the renewed focus on secondary cities, signalled also in the latest edition of Emerging Trends in Europe by the Urban Land Institute and PwC. While office investors in Munich are paying yields of approximately 4%, those willing to invest in smaller German markets such as Stuttgart can achieve up to 6.5%, the authors point out. As competition heats up further for prime assets in Europe’s major markets, we will no doubt see more investors turn to recovering markets such as Ireland, Spain and Italy. Chinese investors may not yet be galloping there, but they are certainly set to become mighty contenders elsewhere in Europe.
Judi Seebus,
Editor-in-chief