Europe's real estate markets have put the worst of the crisis behind them and are clearly on an upward trend, says Daniel Piazolo, managing director of Investment Property Databank in Germany and moderator of a panel at Mipim on institutional behaviour. While this will clearly benefit cash-rich institutional investors, they are not headed for a real estate 'bonanza', he says. 'I don’t think we will see the kind of hype that we saw in 2006 and 2007. Institutional investors will be far more risk-conscious,' he notes.
Europe's real estate markets have put the worst of the crisis behind them and are clearly on an upward trend, says Daniel Piazolo, managing director of Investment Property Databank in Germany and moderator of a panel at Mipim on institutional behaviour. While this will clearly benefit cash-rich institutional investors, they are not headed for a real estate 'bonanza', he says. 'I don’t think we will see the kind of hype that we saw in 2006 and 2007. Institutional investors will be far more risk-conscious,' he notes.
One investment category in particular that may see increased institutional interest - particularly in view of the limited supply of core product - is infrastructure, notes Piazolo. This may encompass anything from buildings that house government departments and public services to tunnels, bridges, sewage treatment plants and motorways. Infrastructure is particularly attractive as the tenants are invariably solid, state-backed institutions so the income for the investor is stable and guaranteed. Piazolo: 'You can’t get a better tenant than the state.'
Now that governments are strapped for cash and face substantial tax shortfalls, the need to find alternative means of financing for infrastructure is becoming more urgent and private investment is becoming more acceptable as a result. Piazolo: 'In Europe, I think we may even see prisons being invested in by real estate funds and insurers.'
For big investors like re-insurance companies which have billions to spend long term, infrastructure is particularly attractive because of the possibility it offers of making major, lump-sum investments without major risks. Piazolo: 'If the tenant is a public body with taxing powers, no matter how bad things get, the investor will get a guaranteed return.'
Session: Institutional Behaviour - Building on Traditional Values?
Moderator: Dr Daniel Piazolo, managing director IPD Investment Property Databank Germany
When: Tuesday 16 March, 10.00 - 11.00
Where: Auditorium A, Level 3, Palais des Festivals
