European property market expo-sed
#Week40 saw the Innesco team travel to Munich for Expo Real, one of Europe’s biggest investment and real estate trade fairs.
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Traditionally a bellwether for the European investment market, this year’s Expo offered up more questions than answers. What is going to happen to interest rates? When will sellers realise a price correction? When will the market recover? And are any deals being done?
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As an asset class typically dependent upon leverage, real estate is particularly sensitive to interest rates. Uncertainty on this front has stymied investment activity for the past three quarters at least. But with central banks starting to hold the line, there is growing hope that the situation might have finally stabilised.
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Stable interest rates are a prerequisite for the investor confidence that is needed to fuel transactional activity. The recent notable absence of this confidence has reduced activity on the buy side, while plummeting asset values have diminished activity on the sell side for all but the most distressed of sellers. This tendency to “extend and pretend” has masked the true state of the European investment market for the past 9-12 months, but with debt markets stablising and sellers beginning to accept repricing, there are positive signs that point towards an uptick in transactional activity. Meanwhile, there is a wave of refinancing due to wash over the market during the next few years that will either rebalance or redefine the sector for the next cycle.
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Overall, there is a sense that a market that has been underpinned by cheap debt for the best part of a decade is undergoing an evolution. This is where the sector as a whole needs to employ creative, as well as financial, acumen. Investors need to embrace new sources of finance and developers and asset managers need to get innovative with the places they are building. Alongside the established banks, investment funds, private equity houses and brokers, Expo also played host to businesses like Bricks and Stories and This is Really Happening that are delivering genuinely ground-breaking solutions to real estate problems. These solutions – viewed through a creative lens and delivered by experts from the worlds of advertising, branding and hospitality – have the power to create points of difference for struggling assets, driving and enhancing values in the process.
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As for any market in a state if flux, where some see problems, others will see opportunity. Those who embrace change and are prepared to challenge the status quo will likely end up better prepared and better equipped for the future of real estate.
Events coming up
Reason to Smile
领英推荐
Anyone that has been to an auction will know how easy it is to get caught up in the moment and over-excitedly find yourself bidding for something that, in the cold light of day, you maybe aren’t that keen on after all.
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So spare a thought for Claire Segeren and Cal Hunter, who went to a Glasgow auction in 2018 with the intention of buying a flat to renovate and sell on. A straightforward enough plan, until it transpired Cal Hunter had in fact been bidding on the wrong lot. Instead of a city-centre apartment, he had paid ￡10,000 for one of four flats in the derelict and abandoned Jameswood Villa in Dunoon, a village on the Firth of Clyde to the west of Glasgow.
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Having acquired the other three flats, the couple set about renovating the property, living in a campervan on site and taking on much of the work themselves, while a campaign secured generous donations of salvaged items from locals interested in the project.
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Their efforts were rewarded earlier this year, when the home was signed off by the local authority. A wreck has been transformed into a handsome home. So a tip of the hat to Cal and Claire, and a reminder that when it comes to real estate, even the most unlikely of assets can present an opportunity.
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