PropertyTV: Structural shift brings Asian investors of all sizes to Europe

A wide range of large to medium-sized institutional investors from Asia are actively seeking to build up their real estate holdings in Europe, according to Rob Wilkinson.

The new CEO of Paris-based fund manager AEW Europe said there has been a 'structural shift' in the Asian market caused by the combination of significant pools of available capital and increasing prices for local real estate. As a result they are looking to invest outside their home markets, particularly in Europe and the US.

Sovereign wealth funds, big insurance companies and high-net-worth individuals are looking to put significant amounts of capital into play into Europe via direct property transactions, Wilkinson told PropertyEU during a video interview at the Mipim fair in Cannes. 'The initial investment strategy have been a core focus, sometimes looking at trophy assets and the main focus is on the key cities in Europe - London, Paris and the major German cities as well.'

'There is little doubt the focus of these investors is to look at European prices, and to say some of those assets are pricing attractively and they are building up their portfolios in that way.' This is particularly true of very high-quality assets in relative terms, he added.

At the same time, the relative sizes and strategies of Asian investors differ significantly, Wilkinson pointed out. 'We have a big group of investors who are going the direct route, and these include some of the sovereign and larger institutional investors.' By contrast, mid-sized institutions are, in general, looking to work with European asset and investment managers via separate accounts to build their own portfolios, he noted. 'What we are now seeing emerge particularly in some of the smaller markets within Asia such as Korea, Taiwan and even Thailand is that they are starting to look at fund vehicles to access real estate.'

Like other inter-regional newcomers before them, investors from the Asian regions generally start their European investment programme in London. The bigger investors are keen to access large portfolios, Wilkinson said. 'I don't think they have finished their investment strategies and requirements in London and Paris and other German cities. As they start to build those portfolios there is no doubt they will look at other European countries and I think Spain, Italy and also parts of Benelux will also benefit. We are seeing some of those investors start to look at Central Europe. They will continue to deploy into the main Western European markets and then they will emerge and evolve from there.'

To date the concentration has been on offices and retail, with logistics property likely to be the next beneficiary.

Click on the link to watch the full interview with Rob Wilkinson