France remains a great investment destination despite overblown concerns about unrest in the streets, delegates heard at Real Asset Media’s European Outlook Briefing which took place in New York last week.
‘It is business as usual in France,’ said Guillaume Turcas, Managing Partner, Faro Capital. ‘The media have really amplified the yellow vests protests, creating an exaggerated perception of risk. In reality they represent a tiny minority of the population and, from a business perspective, they do not have any impact at all. US investors have been asking us to price a phenomenon like the yellow vests movement, but you can’t, there is no formula that allows you to price it.’
A much bigger drawback, he said, ‘is changing regulations, which create uncertainty and don’t make planning easy for real estate investors’.
Carsten Loll, Partner, Linklaters, agreed that investors should not be deterred by transient events: ‘The politics may be a bit uncertain in France at the moment, but they do not have much of an impact on the market,’ he said.
Paris, in particular, still ranks n2 in the list of European investment destinations and it is a very large market that throws up many opportunities for foreign investors, especially in value-add, Turcas said. There is a lot of money to be deployed which makes for an interesting market, but investors must keep in mind that they need to find assets that need value creation and to sweat their assets to get more yield.
Maintaining a strict discipline and choosing excellent locations are the two most important things. ‘Concentrate on Tier1 locations like Paris and, if you want to step out of the crowd, seek assets with more complexity, like technical or leasing issues or legal claims on the building,’ he said. ‘That way when you clean up the mess you are left with a good asset in a good location.’
In order to execute this strategy investors must be confident they can deal with the difficult issues or know someone who can, said Alexander Fischbaum, Managing Partner, AF Advisory: ‘Only go into complex assets if you have the knowledge or if you have the right partner, otherwise it will end in tears’.
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