A lot of capital is targeting Europe but it is not an easy place to invest and investors need discipline and a clear strategy, experts agreed at Real Asset Media’s European Outlook Briefing which took place in New York last week.
‘Europe really is not easy,’ said Carsten Loll, partner, Linklaters. ‘It is becoming more and more difficult to know where to invest, you need local knowledge and boots on the ground, so domestic players have an advantage.’
When overseas investors look at Europe, they see a multitude of markets, each with its opportunities but also its drawbacks. The Nordics are stable and attractive, but they are a very small market. The UK has Brexit uncertainty hanging over it, France has had some social unrest, Spain and Italy attract mainly opportunistic investors and Germany has become expensive and competitive.
‘I think it’s easier for Europeans to invest in the US than for Americans to invest in Europe,’ said Adriana De Alcantara, Managing Director, Portfolio Management, Real Estate Americas, Nuveen. ‘There are too many countries with different markets and different regulations, so getting money out of the US into Europe it’s extremely difficult’.
For Europe’s real estate sector complacency is a real danger after a good run that has lasted ten years. Players should keep their eye on the ball and focus on quality.
‘Real estate has been too successful for a decade and I can see the warning signs,’ said Loll. ‘It is like the German car industry before diesel came along, successful but too arrogant. There are too many buildings that are not great or are downright ugly but they still sell. The sector should focus instead on really good products that people really want.’
Realism and discipline are good guides to investing in any country in Europe, said Alexander Fischbaum, Managing Director, AF Advisory: ‘Go to a country that is stable and that you have confidence in, be realistic about what you can buy, have a clear strategy and be very disciplined in implementing that strategy. If you stick to those principles you can make a lot of money in almost any market’.
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