TOP 100 INVESTORS: Insurers gain ground in European real estate arena

For the third year running, Paris-based AXA Real Estate has significantly boosted its assets under management and gained the number one slot with €47.3 bn as of 31 December 2013.

AXA Real Estate was by no means the only investment manager affiliated to an insurer that saw its AUM grow in the past year. Indeed, four of the five top players in our ranking reported an increase over 2013 and overall the insurers account for 21% of our total pie, a rise of two percentage points year-on-year.

Real estate managers affiliated to financial groups account for a slightly larger portion of our property pie with Credit Suisse in the top position. The German banks are also well represented through their open-ended fund managers. The big three remain Deka Immobilien, Union Investment Real Estate and Commerz Real which all rose in the ranking this year while Deutsche Asset & Wealth Management and SEB Asset Management both saw a decline.

France also spawned a strong contingent headed by AEW Europe and BNP Paribas Real Estate with La Française Real Estate Managers some distance behind. Our ranking excludes NAMA and Sareb, the ‘bad banks’ for Ireland and Spain respectively which are among the biggest owners of real estate since the crisis.

LISTED COMPANIES DOMINATE
Combined, listed companies and REITs form the largest single category of our top investors alongside investment managers related to financial services companies. Although the share of Europe’s listed real estate sector in our ranking slipped slightly year-on-year, overall the sector is growing, according to Philip Charls, CEO of the European Public Real Estate Association (EPRA). Indeed, he has predicted that the European sector may boost its share of the industry’s global market capitalisation to 18% by the end of 2015 from 15.6% at the end of August 2014.

Charls attributes the growth to strong international investment flows, a buoyant IPO market and a structural change in how institutional investors manage their property portfolios. ‘Europe is back,’ he told the EPRA annual conference at end-September. Investors have bet on the real estate recovery story and we’ve seen the strongest European property IPO market in 20 years.’

Up to very recently, foreign institutional investors have had few options to enter the Southern European property market through liquid investments. But that is changing. Although Spain failed to deliver any contenders for this edition of our Top Investors in Europe, the seeds have been sown for a new Spanish harvest. Spain has seen four listings on the Madrid stock exchange in the past year, raising nearly €3 bn of equity and more are on the cards. Newly launched REITs in Spain have already received backing from sophisticated foreign investors of the likes of Quantum Strategic Partners, Paulson and Co, Moore Capital Management, APG, Cohen & Steers and the Canepa group. The UK has also drawn a huge number of foreign investors since the introduction of the REIT regime in 2007. Nearly three-quarters of the country's investor base is overseas, a reversal of the previous situation when 75% of the total was domestic.

The total for the leading international brokerage firms with a real estate investment management arm slipped slightly, due partly to the disappearance of Cushman & Wakefield Investors which is now part of La Française Forum Real Estate Partners.

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