Expo Real: ‘Capital is being re-focused on offices’

Offices in Europe’s winning cities are still top of investors’ wish lists, delegates heard at Real Asset Media’s European Office Investment briefing, which was held at the International Investors’ Lounge at EXPO REAL last week.

After a high volume of transactions in 2018, this year saw a significant slowdown in the first few months as fears of a late cycle and higher interest rates took hold. Over the course of 2019 the tables have turned again.

‘In the lower for longer context, capital is being re-focused and investors are ready to deploy capital and make significant investments,’ said John Mulqueen, Head of Offices EMEA, CBRE Global Investors. ‘If you invest for the long term, you can fix very low levels of interest for long periods of time’.

John Mulqueen, Head of Offices EMEA CBRE Global Investors, Andrew Westbrook, Partner, RSM, Boudewijn Ruitenberg, Chief Operating Officer EDGE Technologies, William Matthews, Partner, Global Capital Markets Research, Knight Frank discuss the current trends in the European Office Sector. Filmed at the International Investors Lounge, EXPO REAL 2019 by Real Asset Media.

Activity is picking up again and concentrating on the same top five countries, but in a different order. ‘The rankings have changed,’ said William Matthews, Partner, Global Capital Markets Research, Knight Frank. ‘Germany has overtaken the UK and is now the number one destination for office investment’.

What has not changed is the focus on the main cities that attract talent as well as capital.

Investors should look at cities with young populations, good universities and good prospects, said Andrew Westbrook, Partner, RSM: ‘Ask yourself where the workforce of tomorrow will want to be. The answer is that cities like Berlin, Munich, Paris and London will go from strength to strength’.

The demand for good quality buildings in those cities is already strong and will intensify further, said Boudewijn Ruitenburg, COO, EDGE Technologies: ‘The future is winning cities and losing regions, because talent is concentrating in a few areas’.

Start-ups and tech companies are flocking to Berlin, where ‘rents have gone up but are still half of those of London or Paris so from our point of view it still has a long way to go,’ said Mulqueen.

Follow the growth of tech to determine a city’s attractiveness, said Ruitenburg: ‘The tech sector can produce double digit numbers with no correlation to the country’s GDP, so that is what we look at rather than the cycle. It is true in Berlin and it is true in London, where the banks may be down but tech is still going up and up’.