German real estate group Patrizia Immobilien remains bullish on the UK despite the country’s vote last Thursday to exit the EU, its head of research Marcus Cieleback has told PropertyEU.
'We can only speculate about what's coming next,' Cieleback said. 'However, our main focus in the UK is the PRS sector, where we see a strong imbalance between supply and demand. Demand for the sector is strong and supply is weak and the Brexit hasn’t really changed that dynamic. I think the fundamentals are still good.'
Patrizia is currently developing two PRS projects in the UK. Earlier in June this year, it announced that it had acquired Trocoll House in East London from London-based property group Coplan Estates to develop 198 'build to rent' units. The 13,935 m2 tower, with views over Canary Wharf and the City of London, is part of the group's wider strategy to acquire, develop and manage build to rent properties in the UK.
It marks the second major UK scheme acquired by Patrizia after last year's acquisition of the First Street site in Manchester which recently received planning permission for the development of 624 units. Patrizia has not disclosed the purchase prices. Manchester has experienced a surge in demand for build to rent properties in recent years, with private rentals now accounting for 16% of all households in Greater Manchester, reflecting an increase of 62% between 2001 and 2011.
Despite the Brexit, Patrizia is still on track to grow its AUM by €2 bn annually. Today, Germany accounts for the majority of Patrizia's assets, or 67% of its portfolio, with an additional 12% invested in the UK and Ireland, 7% in the Netherlands, 5% in the Nordics and 3% in France and Benelux countries. However, Klaus Schmitt, COO of Patrizia Immobilien in Augsburg, told PropertyEU earlier this year that the group's international business could overtake its German arm if it 'is able to access large portfolios abroad in the same way [we have] been able to in Germany'.
Today, residential assets account for 38% of Patrizia's portfolio, followed by offices (33%) and retail (16%). Patrizia is also looking to become more active in Italy this year, likely in the retail and residential sectors; it is starting to eye Poland, too.
Including sales and acquisitions, Patrizia completed €8.7 bn of real estate transactions in Europe last year. This includes acquisitions of €4.4 bn of property across Europe, of which €1.7 bn was in Germany. The group’s business is divided into three segments: pure third party business with €9.5 bn of AUM; its co-investment business, with €6.6 bn of AUM and and a smaller bucket of around €300 mln in ‘principal investments' as of end-March 2016.
